Economic Uncertainty: AfDB warns of currency depreciation by 2025

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African currencies are expected to face significant challenges in the coming year, with major economies like Nigeria, Egypt, Ethiopia, and Ghana projected to see currency losses of six percent or more. According to the African Development Bank’s (AfDB) latest report, “African Economic Outlook 2025,” 21 out of 54 African currencies are expected to depreciate against the US dollar this year.

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The report highlights the impact of global uncertainty on African currencies, citing geopolitical tensions, US trade tariffs, and internal economic pressures as key drivers. Declining export earnings and reduced access to dollar-denominated capital are also expected to take a toll on national currencies.

In Nigeria, the naira remains under pressure despite recent market reforms. Central Bank of Nigeria (CBN) Governor Olayemi Cardoso recently stated that volatility in Nigeria’s FX market has “significantly declined, dropping below 0.5 percent,” attributing it to monetary and fiscal reforms aimed at stabilizing the macroeconomic environment

However, the report notes that the depreciation trend is largely attributed to potential declines in export earnings, which may put additional pressure on national currencies. On the other hand, currencies in Kenya, Morocco, and the CFA franc zone are expected to appreciate by more than three percent against the dollar, supported by stronger market fundamentals.

The Kenyan shilling and South African rand have both rebounded, supported by increased investor inflows and political stability. According to the report, Kenya saw a surge in portfolio investment after a successful Eurobond buyback. In contrast, currencies of countries such as Guinea, Mauritania, and the Seychelles faced continued depreciation pressures, reflecting macroeconomic challenges and fragile market conditions.

The report also highlights that most other African currencies experienced relative stability or appreciation, particularly those pegged to the euro. The CFA franc, Cabo Verdean escudo, São Tomé and Príncipe dobra, and Comoros franc remained largely stable, benefiting from the euro’s stabilisation against the dollar last year. Meanwhile, gold has become a strategic fallback for countries like Zimbabwe and South Sudan, seeking to hedge against currency instability

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