Precious metals gains pushing several African currencies higher

A surge in the price of precious metals is helping several African currencies to rebound from a weak start to the year.

The Zambian kwacha is up about 8% so far in June, the best performance globally. It’s followed by the Tanzanian shilling, up 4% this month, and not far after by the Nigerian naira, up 3.1%, according to data compiled by Bloomberg.

The rally in the three currencies comes on the heels of a surge in the prices of metals from platinum to palladium, gold, silver and copper. Ghana, which defaulted on its debts in late 2022 and is one of the world’s biggest exporters of gold and cocoa, has the world’s best-performing currency year-to-date, with the cedi appreciating more than 43% against the dollar.

The rebounds are cushioning sharp depreciations last year that fueled inflation and caused cost-of-living crises in places including Nigeria, Ghana, Egypt and Ethiopia, which had some of the worst-performing currencies in 2024 — falling by anywhere from 19% in Ghana to 56% in Ethiopia. The currency pressures forced many countries in the world’s poorest continent to raise interest rates to try and get a grip on inflation and attract capital inflows.

Now, stronger currencies on the back of a weaker dollar are helping to “reduce inflationary pressures, which can open the door to interest-rate cuts,” said Simon Kitchen, head of macro strategy at Emerging and Frontier Capital.

© 2025 Bloomberg

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