Africa-Press – Rwanda. As of today October 28, the US Dollar is being sold at Rwf 1,012 hitting an unprecedented mark since 2015 when the value of local Rwanda franc embarked on a gradual fall and never seemed to stop.
The local Rwanda franc is also poorly performing against regional currencies in East African community especially weighed against the Kenya shilling and Uganda shilling.
What does this currency depreciation mean for Rwanda?
Currency depreciation is a fall in the value of a currency in terms of its exchange rate versus other currencies. Currency depreciation can occur due to factors such as economic fundamentals, interest rate differentials, political instability, or risk aversion among investors.
Countries with weak economic fundamentals, such as chronic current account deficits and high rates of inflation, generally have depreciating currencies. Currency depreciation, if orderly and gradual, improves a nation’s export competitiveness and may improve its trade deficit over time.
But an abrupt and sizable currency depreciation may scare foreign investors who fear the currency may fall further, leading them to pull portfolio investments out of the country. These actions will put further downward pressure on the currency.
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