As the global economy enters another crisis period, African currencies are falling against the US dollar and rising import prices are contributing to inflationary pressures.
With around half of all international trade invoiced in dollars, a stronger greenback hurts consumers across the world — including in Africa — that use dollars to pay for imports. The dollar’s rapid rise is partly down to the US Federal Reserve’s series of aggressive interest rate hikes in recent months and also the fact that the greenback is traditionally seen as a “safe haven” asset by investors in times of economic volatility. The pain is not limited to Africa. The British pound is now at its lowest level since 1985 against the US dollar, while the Japanese currency is at its weakest level since 1998. In contrast, the euro is now below parity with US dollar for the first times since 2002. Moreover, the European single currency’s depreciation directly affects the 14 African countries that use the CFA franc, which is pegged to the euro at a fixed rate.
Meanwhile, Steve Hanke, a Professor of Applied Economics at Johns Hopkins University, publishes Hanke’s Currency Watchlist that lists a group of currencies that have depreciated by at least 20% against the dollar since January 2020. Hanke’s currency watchlist displays the order of currency devaluations and inflation rates of countries. According to the latest ranking by Hanke’s Currency Watchlist, the Zimbabwean dollar has been rated the worst-performing currency in Africa, having depreciated against the US dollar by 97.33% since January 2020. The Sudanese Pound, which has declined by 84.95% against the dollar, is in second place. South Sudan is third (50.79%), Nigeria is fourth and 11th globally on the list, while Ghana, Malawi, and Sierra Leone are fifth and sixth, respectively.
Source: north africa post
