Traders expect the Nigerian naira and the Kenyan and Ugandan shillings to weaken in the coming week to Thursday. In contrast, the Ghanaian cedi and the Zambian kwacha are expected to remain flat, as traders suggest.
The Kenyan shilling appears to be falling due to increased demand for dollars from sectors including manufacturing.
Commercial banks quoted the shilling at 157.00/158.00 per US dollar, compared with last Thursday’s close of 156.50/157.50.
“It (the demand for dollars) is right across the industry. manufacturing and so on. It (the shilling) continues to weaken,” said a trader.
Traders said the central bank had agreed with banks late last month to allow bid-ask spreads of up to 1 shilling, up from 20 cents previously.
UGANDA
The Ugandan shilling is expected to weaken, undermined by demand for dollars from the energy sector and importers of general goods.
Commercial banks quoted the shilling at 3,800/3,810 to the dollar, compared with last Thursday’s closing rate of 3,775/3,785.
“Fuel importers are making significant (dollar) demand, I would expect that to be a key dynamic in the coming days,” one trader said.
He said the shilling is likely to trade in the 3,800-3,840 range next week.
NIGERIA
The Nigerian naira is likely to fall on the official market to trade close to unofficial market levels due to dollar shortages and as businesses resume business after the Christmas holidays.
The naira was at 899 per dollar in the official market on Thursday, against the parallel market rate of 1,230 naira.
“Unless there is renewed confidence or (forex) buyers start resisting, I don’t see anything stopping the naira from trading lower,” a trader said.
GHANA
The Ghanaian cedi is expected to be broadly stable as trading activity has yet to pick up in the interbank market.
LSEG data showed the cedi at 11.9000 to the dollar on Thursday, the same as last Thursday’s close.
“The cedi was largely flat against the dollar to start the year with the market quiet as many participants are yet to return from their holidays,” said Sedem Dornoo, senior trader at Absa Bank Ghana.
“We expect that narrative to persist.”
ZAMBIA
The Zambian kwacha is likely to be stable, supported by central bank interventions after a prolonged slide.
On Thursday, the kwacha was trading at 25.75 per dollar, down from 25.20 per dollar on December 21.
Zambia’s central bank sold $74 million in Wednesday’s session to support the local currency, Access Bank said.