African contries wey dia currency gain as pound fall

Dc6fea40 3dcf 11ed A868 F97fbfb2e1c7 File photo of the Ghana Cedi

Tue, 27 Sep 2022 Source: www.bbc.com

On di day wey di value of di British pound drop to record lows, African currencies too bin join di party as dem gain ground against di pound.

On Monday morning, di pound briefly drop by as much as 4% against di US dollar for Asian markets, to an all-time low of $1.0382.

Di Kenyan shilling gain 0.15% against di pound.

Similarly, di cedi, Zambian kwacha, Botswana pula, plus di West African CFA gain against di British currency.

However, di South African rand and di Nigerian naira don continue to drop against major world currencies.

Dis dey come for di year wey most African currencies lose value against both di pound and di US dollar.

Ghana cedi na di worst-hit currency, as e drop to nearly 40% against di US dollar since the year begin.

Di cedi don also lost 20% against di British pound for 2022. But e marginally gain to quote at 10.83 units for early Monday trading.

“Every kontri dey struggle wit dia currency as dia imports pass dia exports," Richmond Frimpong, one Ghana-based analyst, tell BBC.

Dis don increase di demand for foreign currency and so dia price dey rise, e tok.

Why di Pounds dey drop low

Di value of pound don fall to a record low against di dollar as markets reat to UK biggest tax cuts in 50 years.

Sterling fall close to $1.03 early on Monday before e regain some ground to stand at $1.08.

Chancellor Kwasi Kwarteng don promise more tax cuts on top of one £45bn package e announce on Friday as expectations dey say borrowing go increase.

Investors around di world dey buy and sell huge amounts of foreign currency. Di aim na to get profit as dem go buy currency wey get high value.

Di pound dey fall because investors dey sell am. Dem dey doubt goment plans, Jabe Foley of Rabobank tok.

"Dem dey worried say some of these tax cuts wey goment announce no go dey fully funded," she tok.

Na dis same concern, push up di cost of goment borrowing.

Wetin happun to di pound?

Di pound fall in response to di UK goment huge tax cutting mini-budget.

Jane Foley, oner currency strategist for Rabobank, say di sell-off show say investors get doubts about di goment plans.

"Dem dey worried say some of dis tax cuts wey dem don announce no go dey fully funded.

E go result in a large amount of debt at a time wen di Bank of England go dey sell some of im holdings of UK goment debt," she tok.

Di pound bin already dey slide against di dollar in di weeks before di mini-Budget, partly sake of di strength of di US dollar.

E bin dey trading at $1.135 earlier for September - di first time e bin fall below di $1.14 mark in nearly four decades.

Di trend na sake of rising prices and rising energy costs wey don continue to squeeze pipo accounts.

Di cost of living dey rise at its fastest rate in 40 years, with food, fuel and energy prices wey all done go up.

Dis year, di pound don fall more against di dollar dan oda currencies.

Na di worst annual fall against di dollar since Britain vote to comot European Union (EU) for June 2016.

How dem take dey value currency

Exchange rates -di rates at which currencies dem dey buy and sell – dey change constantly.

Many tins dey affect am, wey include;

Economy: Successful economies get strong currencies because oda kontris dey go there go invest.. Dem go need dilocal currency to do so, dis go push up di demand and di value.

Savings: If di Bank of England raise interest rates, holding savings or investments in pounds usually dey become more attractive and e go increase di demand for sterling.

Prices: If UK goods cheap pass oda western kontris own, e go dey attractive to foreign businesses wey need sterling to buy dem. Dis go push up di exchange rate

Public finances: Di state of a goment bank balance or how much debt e get, fit also affect di exchange rate.

Speculation: Di exchange rate dey highly vulnerable to currency speculator wey dey buy and sell sterling based on wetin di future hold.

Source: www.bbc.com
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