Online Reporter
Ghana, Tanzania and Uganda face the highest risk in Africa of a plunge in their foreign-exchange holdings if gold prices fall suddenly, potentially putting renewed pressure on their currencies.
The three countries already rely on bullion for a significant share of their export receipts, as much as 45 percent in Ghana’s case, 42 percent in Tanzania’s and 35 percent in Uganda’s, according to Fitch Solutions’ BMI unit.
A bullion price slump “will deflate the value of their gold reserves, by extension the inflows of foreign currency and see non-gold reserves suffer as well,” Orson Gard, senior analyst for sub-Saharan Africa at BMI said in an online briefing Wednesday.
BMI, whose base gold price for 2025 is $3 100 per ounce, expects prices to remain elevated relative to historical levels but believes the precious metal’s rally is over, Olga Savina, its senior analyst for commodities, said at the same event.
Gold prices have surged nearly 26 percent this year to 3 298.54 partly due to central banks buying the metal to decouple from US assets because of a global trade war sparked by Donald Trump’s tariffs.
The World Gold Council said central banks planned to continue gold buying programs over the next 12 months.
Other African nations that have gold in their reserves mix or plan to add it include Burkina Faso, South Africa, Nigeria, Rwanda and Kenya.
Beyond the risk of a gold price slump, African nations also face liquidity challenges, as they may struggle to convert gold into more liquid assets such as foreign exchange or short-term securities, said Gard.
“This would be especially problematic for countries that are also reliant on gold export receipts as a means of preserving external solvency.” — Bloomberg
