Currency movements in December reflected the economic and political realities shaping exchange rates. Factors such as trade performance, inflation, central bank policies, and geopolitical developments played a pivotal role. The appreciation of the cedi, shilling, and naira was driven by increased exports, improved trade mechanisms, and favorable monetary policies. In contrast, the ruble and South Sudanese pound experienced depreciation due to sanctions, inflation, and ongoing political instability.
Currencies Gaining Value Against the U.S. Dollar:
GHS – Ghanaian Cedi
The Ghanaian cedi has appreciated due to an increase in account surplus and a reduction in outflows. In the first half of the year, gold and crude oil exports rose, significantly boosting revenue. Additionally, capital and financial account outflows decreased compared to 2023. This improvement in the balance of payments has increased reserves, thereby strengthening the cedi.
NGN – Nigerian Naira
The Nigerian naira has appreciated against the US dollar in recent weeks. In December, the Central Bank of Nigeria launched a new trading platform for foreign exchange. The Electronic Foreign Exchange Matching System (EFEMS) allows banks and authorized dealers to trade foreign currency for spot transactions involving the US dollar and the naira. The naira quickly gained value after EFEMS was implemented, reflecting increased market confidence.
TZS – Tanzanian Shilling
The Tanzanian shilling has appreciated against the US dollar due to multiple economic factors. Recently, Tanzania achieved a record sale of cashew nuts, its largest export. This surge in revenue bolstered the economy and, in turn, strengthened the currency. Furthermore, the United States Federal Reserve's third interest rate cut narrowed the gap between the two currencies, further supporting the Tanzanian shilling's value.
Global Currencies Losing Value Against the U.S. Dollar:
RUB – Russian Ruble
Several factors have contributed to the ongoing depreciation of the Russian ruble this month. Western sanctions imposed in November 2024, combined with the ongoing war in Ukraine, have placed significant strain on the Russian economy. US sanctions have limited Russia's ability to sustain its exports. Meanwhile, inflation remains above the target rate, influencing interest rates set by Russia's central bank. As a result, the ruble continues to weaken, with analysts predicting that this trend is likely to persist.
SSP – South Sudanese Pound
The South Sudanese pound has experienced significant depreciation in the past month. Although the country has been officially at peace since 2018 following a civil war, ongoing community-based unrest and spillover from the conflict in Sudan continue to hinder economic development. As a result, high inflation and currency depreciation persist. Additionally, recent changes in leadership within the Ministry of Finance have further complicated the economic situation.
Every month we provide updates on currency via our blog AIRSHARE.
Just Released! For additional insights on inflation and exchange rate fluctuations, check out our quarterly online report, Data Points.
