RWANDA's Forex Bureaus Hold on Dollars As Shortage Begins To Bite.
Rwanda is facing a dollar shortage, leading to a depreciating franc and concerns over rising inflation.
Forex bureaus in Kigali have stopped exchanging francs into dollars for regular customers, allegedly hoarding the greenback to sell to select clients at high exchange rates.
The Rwandan currency lost 3.7 percent against the dollar in the first half of 2024, with traders buying dollars at up to Rwf1,400 per unit from black market agents.
Importers are struggling to obtain sufficient dollars from their banks, forcing them to turn to the black market.
The central bank has taken action against forex traders involved in illegal trading, closing down several bureaus.
The National Bank of Rwanda (NBR) has attributed the current dollar shortage in the country to increased demand.
They claim this is driven by seasonal effects and booming economic activity associated with the festive season.
The central bank conducts quarterly foreign exchange market surveys and is aware of the situation.
It has taken measures to address the issue, including increasing dollar sales from $5 million to $7 million, conducting inspections, and working with law enforcement to prevent illegal trading and speculative tendencies.
The NBR urges business operators to trade at published rates and request receipts for foreign exchange transactions.
The Rwandan Franc, has followed a global trend of depreciation, due to the US Federal Reserve's interest rate increases aimed at curbing inflation.
Despite a widening current account deficit, the rate of depreciation has stabilized compared to the previous year, thanks to inflows from foreign direct investment and remittances.
The central bank expects inflation to remain around 5% in 2024 and 2025, with the latest rate standing at 2.5% in September.
The NBR assures that it will continue to monitor the situation and intervene as necessary to maintain stability and foster sustainable growth.
However, traders are facing difficulties in accessing dollars from banks, forcing them to turn to the black market where exchange rates are higher.
The ongoing conflict in the Democratic Republic of Congo has also contributed to the dollar scarcity.