Naira First, Kenyan Shilling Next—COVID-19 Is Eating The Value Of African Currencies

Ever since the novel COVID-19 made its way into the continent, local economies have taken different hits. As such, currencies in different parts of the region have been losing value.

The money saga began with a dollar shortage in Nigeria, which devalued the Naira to a record low. As of last Thursday, panic-filled buying triggered a depreciation of the Nigerian Naira to as low as NGN 375 to USD 1, from NGN 365.

Though the value loss can be attributed to all segments of the foreign exchange market, the cause, which is the fall in in crude oil prices, was triggered by the coronavirus menace. Nigeria has, so far, recorded 8 cases of the coronavirus.

Kenya’s confirmed cases only just went up to 7, but the Kenyan Shilling is already suffering devaluation. Per a report done by Bloomberg, the currency has plunged to a record low against the dollar. The data shows that the Kenyan Shilling fell as much as 1.4 percent to 106.51 against the dollar in Friday trade.

It was just yesterday that the Central Bank of Kenya directed financial institutions to go soft on borrowers, a measure to reduce the effects of the COVID-19 outbreak.

Also, the Central Bank of Nigeria (CBN) has created an NGN 50 billion (USD 136 Mn) targeted credit facility, while the Central Bank of Egypt announced a huge 300 basis point cut on Monday.

With the current strained fiscal positions of numerous African governments, the central banks are not likely to get significant fiscal support. Meanwhile the monetary policy barrel is almost empty in most nations.

The United Nations has already estimated that Africa’s GDP rate will fall from 3.2 percent to 1.8 percent this year due to the outbreak. That’s easy to see as South Africa, which just entered another recession, has declared a national state of emergency and banned travel to and from China, Europe and the U.S.

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