- Rwandan franc depreciation eases against US dollar
- Stronger major currencies widen Rwanda’s FX pressures
KIGALI, RWANDA – Rwanda’s franc depreciated by 9.68% against the US dollar in FY 2024/2025, easing from the 12.59% drop recorded the previous year.
New data released by the National Bank of Rwanda shows the slowdown was supported by an improved trade deficit, ongoing domestic foreign-exchange market reforms, and a broader weakening of the dollar on global markets. The central bank said measures designed to curb malpractice in the FX market helped moderate pressure on the franc during the period.
However, the currency’s performance diverged sharply when measured against other major global currencies. The franc weakened by 22.55% against the Japanese yen, 20.26% against the euro, 19.17% against the British pound, and 11.26% against the Chinese renminbi.
Global headwinds and domestic reforms shape currency trajectory
According to the central bank, the faster depreciation against these major currencies was driven largely by their strengthening relative to the US dollar. Analysts say the trend reflects a shift in global currency markets, where a decline in investor confidence in US assets – triggered by the announcement of new tariffs – has reconfigured capital flows and boosted alternative safe-haven and reserve currencies.
The National Bank of Rwanda noted that the combination of international market movements and domestic FX reforms is reshaping the franc’s exchange-rate behaviour. “The easing and moderation were partially supported by improvements in the trade deficit, domestic foreign-exchange market reforms aimed at addressing malpractices, and a broader weakening of the USD in global markets,” the central bank said.
Officials added that Rwanda’s mid-term currency performance will continue to depend on external conditions, including tariff-induced volatility in global markets, as well as domestic efforts to stabilise supply and demand for foreign currency.
The widening gap between the franc’s depreciation against the dollar and its steeper losses against other currencies underscores Rwanda’s exposure to shifts in global investor sentiment, particularly toward the yen, euro and pound—currencies that have benefitted from hedging activity and portfolio realignments in recent months.
Economists warn that the stronger performance of these currencies could translate into higher import costs for Rwanda, especially for machinery, pharmaceuticals, and key industrial inputs sourced from Europe and Asia. However, they note that a weaker dollar may offer some relief for dollar-denominated debt servicing in the near term.
Rwanda’s central bank says it will continue monitoring FX market conditions while pushing reforms aimed at enhancing transparency, combating illegal trading practices and improving liquidity. Despite external pressures, authorities remain confident the country’s policy mix can contain excessive volatility.
