Business Insider AfricaWhile not all African currencies are strengthening, those that are showing indications of strength may profit in numerous ways.
Business Insider Africa
While not all African currencies are strengthening, those that are showing indications of strength may profit in numerous ways.
One of the most immediate advantages of a stronger currency is lower inflation. Many African nations rely significantly on imports of basic products, including petroleum, food, and industrial inputs.
One of the most immediate advantages of a stronger currency is lower inflation. Many African nations rely significantly on imports of basic products, including petroleum, food, and industrial inputs.
When a country’s currency appreciates, imports become less expensive, lowering the cost of living for both individuals and companies.
When a country’s currency appreciates, imports become less expensive, lowering the cost of living for both individuals and companies.
In Africa, this is especially critical, considering that a large part of the products the continent consumes are produced outside of it.
In Africa, this is especially critical, considering that a large part of the products the continent consumes are produced outside of it.
A stronger currency also allows central banks to lower interest rates without risking more inflation, giving them more policy flexibility.
A stronger currency also allows central banks to lower interest rates without risking more inflation, giving them more policy flexibility.
Furthermore, currency strength, when fueled by real economic fundamentals rather than artificial regulations, may benefit local industries by lowering the cost of imported raw materials and machinery.
Furthermore, currency strength, when fueled by real economic fundamentals rather than artificial regulations, may benefit local industries by lowering the cost of imported raw materials and machinery.
Countries with developing industrial bases might use stronger currencies to increase output and exports.
Countries with developing industrial bases might use stronger currencies to increase output and exports.
Source: Newzimbabwe
