November currency review

Every single mainland African currency, bar those pegged to the euro, has lost value against the single currency since our September Cost of Living Survey. Several have fallen heavily, and African currencies dominate our table of biggest exchange-rate losses this month.

The causes mainly relate to Russia's war in Ukraine. African countries have suffered more than most from damaged supply chains for food and energy in particular. As the war has dragged on, it has harmed the global economy. Demand and prices for the many natural resources exported from African countries have fallen, worsening their prospects too.

It is easy to overreact when seeing such powerful exchange-rate trends, especially if you are charged with protecting living standards of expatriate staff posted to affected countries, but there is good reason to take a breath and give yourself a wider view.

Firstly, virtually all African countries have significant inflation currently, which should at least partly offset the exchange-rate factor when calculating cost of living adjustments necessary to protect buying power. More importantly, though, if the timescale is broadened and we look at changes since Russia invaded Ukraine in February for example, it turns out that more African currencies have actually gained against the euro than have fallen.

So, as always, it is worth waiting to see how markets settle. Alongside consistent application of ECA's suggested Cost of Living Adjustments throughout assignments, a measured approach is likely to produce the fairest and least costly results for your expatriates and your company. 

* Open-market rate

Only one currency, the New Zealand dollar, gained more than 2% against the euro in November.

In other news, Argentina continued to complicate its currency regime by adding yet another exchange rate to its collection. This one, for foreign visitors, is designed to discourage them from changing hard currencies into pesos on the black market, by giving them a preferential exchange rate when using debit and credit cards. The latest official rate is EUR 1 / ARS 177, but the tourist rate offers EUR 1 / ARS 300, marginally above latest black-market rates. However, reports suggest the new rate might not always be available as promised, so caution is needed.

As expected, Lebanon has pulled back from its proposed devaluation of the official exchange rate.

And Croatia will become the 20th member state of the Eurozone on 1 January 2023.

Finally, here is this month's selected currency movements table: