The Rwandan franc has weakened against the United States dollar by 2 per cent in the past two weeks according to a mini-survey of forex bureaus in Kigali.
The dollar is currently buying at Rwf627 and selling at Rwf632 up from Rwf617 and Rwf621 two weeks ago.
According to the forex traders who spoke to Rwanda Today, the depreciation is caused by the scarcity of dollars in the market as its value has been appreciating on the international market.
“We have not had enough dollars on the market for two weeks and the demand is exceeding the supply,” said Emmanuel Gasasira, a forex trader in Nyabugogo.
The drop in the franc is expected to boost the country’s exports, which fetched $104.8 million in the first three months of this year.
In 2012, export revenue is projected at $466.7 million, slightly higher than $464.2 million earned last year.
In order to safeguard the competitiveness of the export sector, the National Bank of Rwanda (BNR) has deliberately accommodated this franc depreciation to offset the effect of the appreciation of the dollar on the international market.
However, Monique Nsanzabaganwa, vice governor of BNR, said that the central bank has noticed a depreciation and are working towards stabilising the franc against major currencies.
“Depreciation is a result of market forces, since ours is a liberalised market and this is something normal. But we have intervened to strengthen our currency,” the vice governor said.
At Imanzi Forex Bureau, the dollar is trading at Rwf625and selling at Rwf630 up from Rwf615 buying and selling at Rwf618 two weeks ago.
“When the market dictates the hike in prices of the dollar or any other currency, we have to comply. It is up to the central bank to find the solution,” said a forex bureau operator who preferred anonymity.
Although some importers say it is still early to feel the pinch of the depreciation, because they are still trading in stocks they shipped in early, they have fears about future imports.
“When we trade with countries whose currency have appreciated against the dollar, we risk losses since the dollar is the major trading currencies,” said Alphonse Bayigamba, who imports electronics equipment from Nairobi and Kampala.
However, other international currencies such as the British pound and the Euro have remained stable against the franc trading at 870-900 for the Pound and 750-790 for the Euro respectively.
The Uganda shilling is trading at 0.255-0.27, while the Kenyan shilling is 7.2-7.8 francs and the Tanzania shilling is at 0.36-0.39.
Over the year 2011, Rwanda’s domestic foreign exchange market activity was boosted by a substantial increase in both resources and expenditure by 24.1 per cent and 24.0 per cent reaching the total amounts $4.6 billion and $4.52 billion respectively.
In the same year, the private sector demand for forex increased by 43.3 per cent for imports of goods and 12.5 per cent for transfers.