Oil Prices Surge; Kenyan FX Pressure; Latest on Ghana's Debt Swap; Nigeria's Mixed Exchange; and Egypt's Reserve Boost

Oil prices hovered near their highest levels since mid-April after top producers Saudi Arabia and Russia pledged to extend supply cuts through September, further tightening supplies. Prices have seen a sustained rally, with both key benchmarks notching up their sixth consecutive weekly gains last week. On Monday, Brent crude futures slipped 24 cents to $86 a barrel by 0820 GMT, while U.S. West Texas Intermediate crude was at $82.55 a barrel, down 27 cents.

KENYA: Rising Dollar Deposits Heighten Capital Pressure on Local Banks

Local banks are grappling with intensified capital pressure as dollar deposits surge due to the shilling's depreciation. The value of dollar deposits reached an unprecedented Sh1.185 trillion by June-end, driven by a weakening shilling. Depositors' hoarding of dollars adds to the uncertainty. Moody's analysts caution that the growing net liability position on forex accounts poses risks to African banks, especially in countries with sharply weakened currencies. The IMF and Moody's emphasize the vulnerable forex asset-liability mismatch. Kenyan banks, particularly susceptible, face challenges with forex liquidity and balance due to uneven supply and high demand.

GHANA: Chamber of Corporate Trustees Supports Ghana's Alternative Debt Exchange Programme

The Chamber of Corporate Trustees has signaled its readiness to engage in the Government of Ghana's (GOG) alternative Domestic Debt Exchange Programme (DDEP). This move follows the Ministry of Finance's announcement about the restructuring of ￠31 billion pension funds as part of the second phase of the DDEP. E.S.L.A. Plc and Daakye Trust Plc will be affected by this exercise. The Chamber, collaborating with organized labor, reached this decision with technical guidance. The government's alternative offer aims to swap around GHS 31 billion in eligible bonds for new ones to enhance liquidity. The invitation is valid until August 18, 2023.

NIGERIA: Nigerian Exchange Sees Banking Index Slides, Insurance and Consumer Goods Surge

Last week, the Nigerian Exchange Limited (NGX) witnessed diverse trends. The banking index took a hit, leading losers with a 2.1% dip. Ecobank TransNational Incorporated (-7.9%) and Fidelity Bank Plc (-6.5%) faced sell pressure. Conversely, insurance and consumer goods indices soared by 5.9% and 2.3%, powered by demand for Mansard (17.1%), Custodian (9.1%), Dangote Sugar Refinery (25%), and Nigerian Breweries (16.4%). The AFR-ICT and industrial goods indices also gained, influenced by MTN Nigeria (+1.8%), Betaglass (10%), and Berger (9.5%). Bargain hunting in MTNN pushed the NGX All-share index and market cap up by 0.22%, closing at 65,198.08 and N35.48 trillion, with month-to-date and year-to-date returns at 1.6% and 27.2%.

EGYPT: Egypt's July Reserves Inch Up to $34.87 Billion, Aided by Steady Growth

Egypt's net international reserves witnessed a slight uptick of $71.7 million in July 2023, as per the Central Bank of Egypt's (CBE) data. The country's reserves, which stood at $34.8 billion in June, reached $34.87 billion in July. Marking a steady climb of 11 months, Egypt's international reserves are recovering from the impact of the Ukraine conflict last year, having hit a low of $33.14 billion in August 2022, following a decline from the peak of $40.9 billion in February 2022. Yet, Egypt's net foreign assets deficit soared over 125% year-on-year in June 2023. The nation grapples with a critical shortage of US dollars, a concern persisting for nearly a year and a half. Efforts are directed towards bridging an estimated $17 billion financing gap until 2026.