The dollar shortage that has been persistent in past weeks stems from big demand for foreign currency from several investments the government has been involved in, the central bank has said. The National Bank of Rwanda explained that the current shortage mostly results from a number of strategic investments by the government that will yield good results in the long run despite the current pressure. Central bank governor John Rwangombwa said the pressures on the exchange rate, which were at a depreciation of 4.6 per cent (as of last week), did not come as a surprise and had been projected, at about 8 per cent. In the past, the pressure on the Franc was mostly from poor performance of export earnings but this time government investments have exerted additional pressure. “The pressures are mainly due to bad performance in export earnings as well as big demand of foreign exchange from the big investments the government has undertaken or promoted,” the governor explained. “These are projects such as KivuWatt, which has started producing energy, they have to pay back loans causing new demand on the market; Positivo BGH has been increasing production of their laptops domestically increasing imports of raw materials.” Rwangombwa added that major hotels that completed over the past five months such as Marriott and Kigali Convention Centre had also added to the pressure due to huge demands in foreign currency. “RwandAir continues to expand operations and also increases pressure. These are key strategic investments that will yield good results in the economy but in the short run lead to pressures that we are seeing in the forex market,” he said. However, he called for calm, explaining that the central bank was not only monitoring the situation but making necessary interventions. This was by increasing the volume and frequency of supply of dollars into the market, from once a week to twice a week. “Normally, we have been intervening once a week but now we are intervening twice, we have increased the amount from between $4 million and $5 million, now it is about $8 million a week,” Rwangombwa said. The increase that began in June, he noted, had served to stabilise the market despite the relatively high levels of demand with anticipation that the market would soon normalise. The dollar has been scarce in the Rwandan market in recent weeks, with traders and retailers, saying they are unsure of how long the trend is likely to persist. However, unlike previous instances, the shortage has not weakened the Franc greatly. Forex bureau operators across the city say the low supply of dollars in the market has been felt for nearly a month. Marie Umutoni, an attendant at a Remera-based forex bureau, said they continue to turn away clients seeking large volumes. She said they were, however, optimistic that the delegates coming for the African Union Summit slated to start on July 10 would boost dollar supply. As of Thursday last week, the dollar was trading at Rwf775.5 and Rwf791.0 for buying and selling, respectively. The central bank last year introduced measures to reduce impacts of speculators on the dollar rate and consequent artificial shortages that have previously plagued the local forex market. Among the measures include banning pricing of products and services in foreign currencies. editorial@newtimes.co.rw
