Afreximbank’s initiative to promote local currency transactions aims to alleviate pressure on the US dollar amid rising geopolitical tensions. The dollar index recently stood at 98.465, down 0.18% due to uncertainty surrounding US-Iran talks.
Before this initiative, many African countries relied heavily on the US dollar for trade. The ongoing conflict, which began with US-Israeli strikes on Iran on February 28, has further complicated matters. It has raised concerns about oil supply routes, particularly through the Strait of Hormuz, which carries about one-fifth of global oil shipments.
However, Afreximbank is taking decisive action. The bank launched a $10 billion crisis response program to help African nations navigate these global uncertainties. This program aims to support local currency arrangements in strategic value chains, reducing demand for dollars.
The dollar index briefly rose to 99.3 before slipping below 98.5 as demand slowed sharply. This fluctuation reflects market instability linked to geopolitical events. The closure of the Strait of Hormuz poses significant risks for oil and gas shipments.
As part of its strategy, Afreximbank is backing a local currency crude supply framework in Nigeria. This framework seeks to reduce dollar demand within the petroleum value chain. By promoting local currency transactions, Afreximbank hopes to help African economies conserve foreign reserves and stabilize exchange rates.
Experts believe this push could be a turning point for African economies. Mr. Denys Denya stated, “We are also supporting local currency arrangements in strategic value chains. This helps to reduce demand for dollars and gives economies more room to manage their resources effectively.”
The bank’s total assets rose to $48.5 billion in 2025, with net income increasing to $1.2 billion during the same period. These figures indicate growing confidence in Afreximbank’s approach amid challenging conditions.
The Federal Reserve is expected to keep its policy rate unchanged in an upcoming meeting, adding another layer of complexity to the situation. As geopolitical tensions persist, the effectiveness of Afreximbank’s initiative will be closely monitored.
The push for local currency trade could become a major turning point for African economies seeking greater independence from the dollar’s fluctuations and pressures.