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African foreign exchange markets have come under severe selling pressure since the onset of the Middle East conflict, as escalating energy prices, supply chain friction, and rising global risk aversion weigh heavily on the continent’s net-importing economies.

The foreign exchange slump is being led by Ghana (-7.6%), Egypt (-4.9%), and Ethiopia (-3.6%), where heavy reliance on imported fuel and fertilizer has magnified demand for US dollars, according to data from S&P.

At least 29 African local currencies have recorded notable depreciations since the onset of hostilities, eroding central bank reserves and inflating the domestic-currency cost of servicing external debt.

The currency weakness is accelerating a policy divide across central banks on the continent. While some monetary authorities are being forced to tighten conditions aggressively to stem capital outflows and anchor inflation, others are turning to targeted subsidies, import controls, and administrative FX measures to cushion domestic consumers.

External Shocks Feed Import Costs and Debt Burden

According to joint assessments by the African Development Bank (AfDB) and UN agencies, the conflict has acted as an immediate stagflationary shock across the continent. Disruption to Gulf energy shipments and key fertilizer export channels—particularly during critical planting windows—has fueled input cost spikes that feed rapidly into headline consumer price indices.

• Debt Servicing Costs: For economies holding significant dollar-denominated obligations, currency depreciation automatically expands debt-to-GDP ratios and diverts fiscal resources away from capital investment toward interest payments.

• Import Costs: Higher landing costs for refined petroleum and agricultural inputs are widening current account deficits, forcing…