At present, itâs hard for South African businesses and economists to see the light at the end of the coronavirus tunnel. However, there are hopes that the South African economy can rebound significantly in 2021, at least if Finance Minister Tito Mboweni is to be believed.
In a budget speech delivered in Parliament last week, Mboweni highlighted a much improved economic outlook for 2021 as a reason for optimism, with the IMF reporting that the worldâs economy could expand by 5.5%.
Similarly developing economies such as China and India are expected to grow by 8.1% and 11.5% respectively during the same period, while sub-Saharan Africa is forecast to expand by 3.2% in 2021.
Investors are also spoilt for choice when choosing between African currencies, which could offer hope of further prosperity this year. Here are the five strongest African currencies that are likely to be the most traded this year.
1. The Libyan Dinar
Weâll start with the Libyan Dinar (LD), which is widely considered to be the strongest and most robust in Africa.
Interestingly, it has also grown and gained significant momentum against the US Dollar (USD) of late, with this the result of the strict monetary policy introduced by the Libyan central bank and the relative weakness of the greenback against the backdrop of continued stimulus measures.
The former measure has also helped to limit the reach and appeal of the so-called âillegal currency marketâ, which is great news for both day and position traders alike.
Currently, one USD equates to LD4.50 locally, although this typically trades with a narrow range of LD1.36 and LD1.42. This beneficial rate is offered by the Libyan Central bank and only dedicated to international businesses.
2. The Tunisian Dinar
Next up is the Tunisian Dinar (DT), which is a relatively new currency that only came to pass in 1960.
This followed the end of French colonial rule, before which time individuals within the country used to trade using the now defunct French franc.
Currently, one USD equates to DT0.36, with this relatively stable currency pairing usually trading between DT0.34 and DT0.38 (especially through 2020 and the beginning of 2021).
The stability of the pair is underpinned by the use of a crawling peg by the central bank, with this having replaced a USD peg back in 1971.
3. The Ghanaian Cedi
Third on our list is the Ghanaian Cedi (GHS), which has become increasingly influential and consistent in its performance over the course of the last year.
Leading forex brokers have also noticed an uptick in demand for the GHS during this period, as the increased stability of Ghanaâs local currency continues to benefit from a set of central banking measures aimed at preventing a prolonged depreciation.
This is reflected by the USD/GHS pairing, which traded as low as GHS5.54 in May before climbing to a peak of GHS5.93 on December 22nd, 2020.
A single USD now equates to GHS5.74, while the outlook remains bright for the national currency through 2021.
4. The Moroccan Dirham
The penultimate entry on our list is the Moroccan Dirham (MAD), which has endured mixed fortunes of late having recently appreciated by 0.45% against the greenback and depreciated by 0.32% against the Euro (EUR).
As a result, a single USD now equates to MAD0.11, while USD/MAD could well plunge further lows as 2021 progresses.
Interestingly, the MAD is known as the de-facto medium of exchange in the Western Sahara region, which contributes to its status as one of South Africaâs leading currencies.
Although the MAD is also relatively uncontrolled, the law continues to prohibit its exportation at national and international level.
5. The Botswana Pula
The Botswana Pula (BWP) is our final entry, and one that has actually depreciated recently despite remaining one of South Africaâs largest and most influential currencies.
To this end, the USD/BWP pairing has appreciated of late, with a single greenback now the equivalent of BWP11.02.
However, the Botswana currency remains valuable because of the countryâs strong economy and relatively stable democracy, while itâs also available to trade on the Johannesburg Stock Exchange, which is the largest entity of its type in Africa.
Interestingly, the currency was pegged to the value of the South African rand prior to 1976, but this is no longer the case in a more open investment marketplace.