A nnual debt servicing costs are rising for African governments as they return to international debt markets. This increase is driven by higher coupon rates on new issuances, which reflect a risk premium demanded by investors.
Related Brief 1d ago
foreign exchange Geopolitical Risk, Not Oil, Is Now the Ringgit’s Anchor
The ringgit strengthened to 3.98 against the US dollar this week, but gains are stalling — not because of domestic weakness, but because global risk sentiment is still tethered to Middle East volatility. Lower oil prices should be helping the ringgit: Brent crude retreated, easing input costs and improving Malaysia’s trade balance. When oil falls, import bills shrink and inflation pressure cools — a classic tailwind for emerging market currencies. Yet the ringgit isn’t capitalizing. Renewed Israeli strikes in Lebanon have shattered confidence in a durable ceasefire, keeping oil prices elevated on geopolitical risk alone. That risk premium is now the dominant force, outweighing any fundamental relief from lower production costs. Investors aren’t buying the rally. They see the reprieve as temporary. At the same time, the US dollar is firming on strong domestic data — a 4.3% unemployment rate and solid payroll growth — reinforcing the Federal Reserve’s higher-for-longer rate stance. That makes dollar assets more attractive, pulling capital from currencies like the ringgit. Defensive positioning ahead of diplomatic talks in Islamabad only deepens the caution. Kenanga expects the currency to trade between 4.00 and 4.05 in the near term. Technicals show resistance at 4.01 and support at 3.96, but range-bound action is likely until there’s concrete progress on de-escalation. Until then, markets won’t take aggressive long positions. Sustained volatility in Strait of Hormuz-linked energy prices remains a direct threat to Malaysia’s inflation and fiscal outlook — a reminder that for small, open economies, the fate of the currency often hinges not on what happens at home, but on what happens far beyond its shores.
By the end of February 2026, African sovereigns raised approximately $5.4 billion in Eurobonds, led by Kenya's $2.25 billion dual-tranche deal and Côte d’Ivoire's $1.3 billion raise. This marks a tentative reopening of global capital markets after months of constrained access.
Related Brief 2d ago
inflation Higher energy and borrowing costs are now threatening US growth despite relative strength
Higher energy and borrowing costs are now threatening US growth despite relative strength. The US Commerce Department recently halved its growth estimate for the fourth quarter of 2025, revising it from 1.4% to just 0.7%. Spillovers from the US-Israeli war against Iran are materializing as higher energy prices — US gasoline rose 30% and diesel 40% in the first three weeks of the conflict — and rising borrowing costs. These are feeding broader price pressures, with higher input costs for semiconductors, fertilisers, and air travel now being passed on to consumers. Inflation, already persistent, has marked six consecutive years of the Federal Reserve missing its 2% target. The resulting cost-of-living pressures are hitting hardest in a K-shaped economy where wealth and opportunity are deeply unequal. Financial fragilities are emerging: private credit funds are restricting withdrawals, bank financing is eroding, and leverage in parts of the global bond market is drawing concern amid a sell-off. Over the past year, excessive hype-driven capital has flooded into AI and AI-adjacent ventures. In a stagflationary environment of slowing growth and high inflation, these risks could coalesce, tightening financial conditions. The Federal Reserve, already weakened by forecasting errors, policy slippages, and a turbulent leadership transition under political pressure, is ill-positioned to manage a crisis. The most vulnerable segments of the US population are at considerable risk from the convergence of inflation, slowing growth, and financial instability.
Total outstanding African sovereign commercial debt is expected to rise to just over $1.2 trillion by the end of 2026, equivalent to approximately 45 percent of gross domestic product.
Related Brief 5h ago
monetary policy Oil Price Spikes Establish a Higher-for-Longer Interest Rate Floor
Borrowing costs will remain elevated for longer. The Federal Reserve maintained its benchmark interest rate at 3.5% to 3.75% during its March 18 policy meeting. The Federal Reserve's 2% inflation target remains a distant goal. Chair Jerome Powell cited inflation concerns and uncertainty from the war in the Iran war. Brent crude oil prices rose nearly 6% to around $105 a barrel, following geopolitical conflicts in the Middle East that had briefly pushed prices above $85 a barrel. March headline inflation is projected to rise 0.9% month-over-year, the largest jump since June 2022, reaching 3.4% year-over-year. Borrowing costs will remain elevated costs for longer.
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