Rwanda’s weakening currency is taking toll on traders who continue to experience limited access to foreign currency which is partly attributed to the economic slowdown due to the coronavirus pandemic.
Drastic measures, including restrictions on movement of goods and services, to contain spread of coronavirus have adversely affected the country’s major foreign earners such as tourism, foreign investment and exports.
Now, forex traders and the business community are concerned that if the situation does not improve, they may continue to incur losses due to the weakening of the Rwandan franc.
For instance, some members of the business community told Rwanda Today that due to limited access to United States dollars on the market, it now takes them longer to get the required money to conduct business.
For a business transaction of approximately Rwf4.8million, one has to wait for at least 3 days to get the required amount. For transactions above $10,000 it takes longer due to the ongoing shortage.
While the depreciation has been gradual, it has weakened over the past one year from an average of Rwf880 per $1 to at least Rwf 975 in recent weeks.
However, official figures by the National Bank of Rwanda show that Rwandan franc depreciated by 2.3 percent against the dollar by the end of July 2020 slightly lower than the 2.6 percent recording during the same period of 2019.
“The US dollar is unbelievably scarce on the Rwandan market. The depreciation was already there before but at least we would get it. This week, I was supposed to import twice from China, but I cannot find a Forex Exchange Bureau with enough dollars in Kigali,” Joseph Mugwaneza, a business owner and major importer of garments told Rwanda Today.
However, Mr Mugwaneza emphasized that although the pandemic has reduced demand for local currency which led to fewer people bringing in the dollar, the Rwandan franc, in his knowledge, rarely appreciates against the dollar.
According to the Central Bank’s data, in June 2020, compared with the US dollar, the Rwandan franc weakened by 1.6 percent slower than 2.2 percent depreciation recorded in June last year.
Rwandan franc depreciation was subdued in January 2020 due to lower economic activities, the Central Bank said.