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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.

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