EUR/XAF Outlook: Slightly positive, but likely to move sideways, as the rate is above its recent average and near recent highs without a clear driver.
Key drivers:
• The European Central Bank remains neutral with steady rates, while the Central African States Bank has raised rates to support the XAF amid declining reserves, affecting the rate differential between EUR and XAF.
• Oil prices are at highs, which could strengthen the XAF if higher oil revenues benefit the regional economies.
• The re-election of the Central African Republic’s president may lend temporary stability, but ongoing fiscal concerns in Cameroon raise potential challenges for the XAF.
Range: The EUR/XAF rate is expected to hold steady within its recent range, with minor fluctuations but unlikely to test extremes.
What could change it:
• A faster-than-expected recovery in Eurozone consumer confidence could lift the EUR.
• Escalation of fiscal issues in Cameroon may weaken the XAF further.