Quantcast
Channel: beyondbrics » Zambia
Viewing all articles
Browse latest Browse all 34

African currencies: a tale of two risks

0
0

The global commodities rout from mid-2014 brought with it severe market volatility that reshaped the growth trajectories of most economies, especially commodity-dependent economies such as those in sub-Saharan Africa. Countries such as Zambia, Angola, Nigeria and Ghana have experienced the effects of this first hand.

In periods of heightened volatility, the response mechanism of central banks becomes a vital factor that either compounds or abates the problem. This point is exemplified by how the various central banks across sub-Saharan Africa have dealt with rapidly weakening currencies and the subsequent rise in inflation. The policy response adopted by central banks in Zambia and Ghana, for instance, has erred on the side of minimum direct intervention in currency markets. In contrast, Nigeria and Angola have applied a heavy hand in defending their currencies. The two approaches have resulted in the formation of two types of risks: volatility and ‘jump’ risk.

Read more

Viewing all articles
Browse latest Browse all 34

Latest Images

Trending Articles





Latest Images