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Now backed by Google’s Data Commons, ONE Data Commons compiles the latest data and analysis on the economic, political, and social changes impacting Africa.

Explore how the global response to inflation is driving down the value of African currencies, deepening the debt crisis, and pinching budgets – which is then making it harder for people to meet their basic needs.

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The US Fed is hiking rates further and faster than in previous cycles

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Inflation is on the rise globally, driven by supply chain issues, massive stimulus spending by G20 countries during the pandemic, and Russia’s war in Ukraine. Global inflation peaked at 10.4% in September 2022. Currently inflation is 7.1% (May 2023) globally and 18.6% in Africa (March 2023).

In an effort to curb inflation, central banks have rapidly hiked interest rates – particularly the US Federal Reserve, which initiated the fastest tightening of monetary policy since the 1980s. While increasing interest rates can dampen inflation, doing so can have unintended consequences. For instance, the relative value of one currency directly impacts the value of other currencies. That’s particularly true for the US dollar, as it is the main currency of global trade, debt, and reserves. As a result, interest rate hikes in the US can have ripple effects across the global economy

African currencies are losing value

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Higher US interest rates strengthen the US dollar, causing other currencies to lose value comparatively. African currencies lost 8% of their value between January 2022 and March 2023. Because the vast majority of goods on global markets – from food to medicines and vaccines – are bought and sold with the US dollar, the purchasing power of African currencies is rapidly eroding.

This often translates into higher prices for consumers. In Ethiopia, lower purchasing power increased domestic wheat costs by 87% between 2020 and 2022. Egypt and Mauritius saw 23% increases. Combined with the ongoing food security crisis, millions more people, especially women, risk being priced out of basic necessities.


Currency fluctuations make Africa’s debt more unsustainable