African Currency and Trade Dynamics: A Comprehensive Overview

In May 2025, nearly half of the currencies across the African continent experienced depreciation. This trend highlights persistent foreign exchange pressures, underscored by a range of ongoing reforms and stable economic growth. Insights gleaned from the African Export-Import Bank’s Monthly Developments in the African Macroeconomic Environment report, published in June 2025, illuminate this complex landscape.

The bank’s findings present a juxtaposition of currency strength throughout Africa. Some nations stood resilient against the storm of both domestic fiscal instabilities and broader global economic challenges. Yet, the weaknesses of several currencies reveal vulnerabilities that many might overlook. For instance, while Ghana, South Africa, Namibia, and Eswatini experienced appreciations, at least ten other nations faced significant depreciation. How do these dynamics shape everyday life for citizens in those countries?

Take Nigeria, for example. The naira showed a slight gain of 2.1% against the U.S. dollar on a month-on-month basis. However, when we zoom out to a year-on-year perspective, it reveals an alarming 11.5% decline. On the other hand, Ghana’s cedi found itself under severe strain, plummeting by 21.5% month-over-month and 10.6% year-over-year. In May, the cedi traded at 10.3 to the dollar—a dramatic drop from 13.9 the previous year. Such fluctuations can significantly impact everyday transactions, leading individuals and businesses to adjust their financial strategies.

South Africa’s rand, while symbolizing a more stable financial ecosystem, wasn’t immune either; it experienced minor depreciation, sliding from 18.1 to 17.8 rand per dollar between April and May—a 0.7% fall. These trends aren’t just numbers; they tell stories of resilience, adaptation, and survival in an unpredictable global financial landscape.

Trade Decline, Credit Improvements, and Market Confidence

The report also shed light on the decline in total African trade, which dropped from $125.9 billion in January to $120.8 billion in February. Interestingly, intra-African trade mirrored this downturn, reducing to $18 billion from $18.6 billion. However, one can take solace in the year-on-year improvements—particularly with intra-African trade growing by 5.6%. This growth can be attributed to the significant impacts of the African Continental Free Trade Area (AfCFTA) and heightened regional cooperation. Isn’t it fascinating how collaboration can drive economic resilience in unexpected ways?

On the fiscal front, Afreximbank highlighted noteworthy improvements in the credit landscape across Africa. Countries like Nigeria and Ghana have recently received credit upgrades due to effective fiscal reforms and enhanced macroeconomic management. For Nigeria, these upgrades from Fitch and Moody’s have resulted in a notable 250 basis point drop in yields for its upcoming Eurobond maturing in June 2031. It’s a small yet significant victory in a wider narrative of rebuilding confidence.

While Ghana faced a tumultuous financial period marked by a selective default in 2024, it too has been upgraded—in this case to a CCC+ rating by S&P—thanks to its successful restructuring of Eurobonds and a renewed fiscal outlook. Similarly, Benin has ascended to a BB- rating, reflecting its strong fiscal performance. South Africa’s rating remains BB- as well, though with a cautionary note from S&P regarding the need to address ongoing fiscal challenges to stimulate growth. These credit ratings are more than just metrics; can they ignite hope again for investors and the populace?

Amid easing global interest rates, several African nations—including Nigeria, Angola, Egypt, Côte d’Ivoire, Senegal, and Morocco—have made a resounding return to the international capital market, successfully issuing Eurobonds and rekindling investor confidence. In fact, Afreximbank describes this resurgence in market activity as a testament to growing resilience and renewed credibility amongst African economies.

However, the report does not shy away from cautioning that external threats loom large. Factors such as fears of stagflation, tightening global financial conditions, geopolitical instability, and fragile trade recovery could easily disrupt this promising trend. With such uncertainty, how can African governments fortify their internal policy frameworks to better withstand potential shocks?

In closing, the report emphasizes the urgent need for African governments to bolster their internal policy buffers and expedite structural reforms. Only then can they effectively shield their economies from external vulnerabilities, navigating through both challenges and opportunities with greater resilience. How we respond today will undoubtedly shape Africa’s economic narrative for generations to come.