The Rwandan franc has remained weak against the dollar due to uncertainties in the global economy and disruption of global trade by the Covid-19 pandemic.

In addition, travel restrictions continue to undermine the tourism sector, limiting sources of foreign exchange.

By Thursday, the Rwandan franc was trading between Rwf977 and Rwf994, against the dollar, due to limited access to the foreign currency on the market.

The recent Monetary Policy Report from the central bank attributes the gradual depreciation of the Rwandan franc to lower demand for foreign exchange to reduced economic activities.

Sharp decline

Forex traders say a sharp decline in the foreign currency demand has been widely felt on the market despite the limited supply of the currency.

“The number of transactions have gone down drastically with the movement of the tourists and international traders curtailed,” a forex bureau operator who preferred not to be named told Rwanda Today.

“Before the pandemic, the shortage of US currency on the local market resulted from the high demand. But now there isn’t a high demand, but still we have a shortage of the currency,” a forex bureau noted.

Vianney Gasana, the vice-chair of Rwanda Forex Bureau Association, said the price of the dollar has remained almost constant since the beginning of the year.

“It’s been unusual to have a constant price on the dollar in over two months. Since January we have been trading on Rwf994,” Mr Gasana said.

Slow imports

“The is little demand for the US currency on the local market. Most of the traders who import their products from China, who needed the dollars, have slowed down their operations because the transport cost went up by $3,000 (Rwf2.9 million) to ship a container from China to Dar es Salaam port,” he added.

However, the Central Bank notes that with the economic activities resumption, it expects a rise in the demand for foreign currencies.

Compared with December 2019, relative to the dollar, the Rwandan franc depreciated by 5.4 per cent in the last two months, the fastest since 2017, against depreciation of 4.9 per cent in December 2019, the central bank said.