{The Rwandan franc slightly depreciated by 1.9% against the US dollar as a result of high demand for foreign exchange to finance imports.}
“The first half of the year has seen a more less stable exchange rate with a modulate depreciation of 1.9% on the official rate and 2.1% on the market rate. This is linked to an increase in foreign exchange resources to the private sector which increased by 14.8%,” the Governor BNR John Rwangombwa said.
Rwangombwa was presenting the monetary policy and financial stability statement in Kigali recently.
According to the monetary policy and financial stability statement, an increase in expenditure of 6.8% was recorded as compared to same period of 2013.
“This really impacted the stability of the exchange rate for the first six months of the year,” Rwangombwa said.
During the first half of 2014, FRW depreciated against the US dollar by 1.9% in June 2014 and traded between FRW670.08 in December 2013 and FRW 682.54 per dollar a slight increase of FRW11.
This depreciation recorded during this period is similar to the 1.8% recorded in June 2013.
This statement revealed that Rwandan franc appreciated against all regional currencies except the Burundian franc.
The Rwandan franc depreciated by 0.6% against the Burundian franc appreciating by 0.9% against the Kenya shilling, 2.5% against the Ugandan shilling and 5.3% against the Tanzanian shilling.
The appreciation of the Rwandan franc against the shilling is because the regional currencies weakened against the USD.
The increase to 14.8% in foreign resources and 6.8% in expenditures led to a cash excess of $25.4million in commercial banks created room for the central bank to reduce its forex sales to banks to $128million compared to $158million it had planned for.
The governor said the Rwanda real effective exchange rate also declined by 0.11 per cent over the period. This was driven by a slight depreciation of the nominal value of the franc against currencies of major trading partners and an increase in prices due to high inflation in foreign countries relative to domestic inflation.
Business Week
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