De-dollarisation in Africa may exacerbate volatility
Thursday, October 27, 2016
Subject
Dollarisation in Africa.
Significance
Low levels of economic diversification throughout sub-Saharan Africa (SSA) and renewed macroeconomic volatility following the commodity price shock pose challenges to ongoing de-dollarisation efforts in the region.
Impacts
- Local currency crises raise expectations of future crises, incentivising continued dollarised structures.
- Zimbabwe's cash shortages are likely to persist through the near term.
- Countries with higher levels of political instability may see greater financial dollarisation.