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African currencies: what’s expected in the next week

The Zambian, Kenyan, and Nigerian currencies are expected to weaken against the dollar in the next week to Thursday, with Ghana’s and Tanzania’s seen holding steady, while the Ugandan shilling is expected to firm, traders said.

Zambia

The kwacha is expected to weaken further against the dollar going into next week due to reduced central bank support and rising festive season demand for hard currency.

On Thursday, commercial banks quoted the currency of Africa’s second-largest copper producer at 16.6000 per dollar, down from 16.5200 at the close of business a week ago.

“The outlook suggests that the kwacha is likely to continue trading on the back foot for the rest of the year,” Zambia National Commercial Bank said in a report.

Kenya

Kenya’s shilling is expected to weaken due to dollar demand in the market from the energy sector, which is expected to persist till the end of the month.

The shilling was trading at 122.0/122.20 on Thursday, compared with 121.70/90 at the close of last Thursday’s session.

The shilling has come under pressure due to dollar demand from manufacturing and energy sectors this week, having hit several fresh lows. It is down nearly 7.3% against the dollar this year.

“We expect the shilling to remain on the weaker foot going into next week,” said one trader at a commercial bank.

Uganda

The Ugandan shilling is expected to trade with an appreciation bias in the coming days with some inflows expected from large credit lines the government is acquiring to bolster its finances.

At 0752 GMT, commercial banks quoted the shilling at 3,745/3,755, compared to 3,765/3,775 at last Thursday’s close.

Lawmakers have approved a request by the government to allow it to borrow $464 million from Standard Chartered Bank while separately, the finance ministry has invited financial institutions to bid to lend the government 500 million Euros.

“These will be huge amounts of inflows that will potentially keep the shilling on a strengthening trajectory,” said a trader at one commercial bank in the capital Kampala.

Nigeria

Nigeria’s naira is expected to fall on the parallel market in the coming week weakened by renewed demand for foreign currency from importers.

The naira was quoted at 800 to the dollar on the parallel market on Thursday, compared to 765 at last Thursday’s close. It traded within a range on the official market.

“The temporary and artificial appreciation of the naira in the forex market has all but faded,” analyst at Lagos-based consultancy Financial Derivatives said in a note.

“If the naira slides further than 810/$, it might have major detrimental effects on price stability in the run-up to a monumental election in February.”

Ghana

Ghana’s cedi is expected to remain stable for the next week, with hard currency demand and supply evenly matched, with central bank offering support.

The currency was quoted at 14.00 at 1037 GMT on Thursday, compared to 14.25 at last Thursday’s close.

“The cedi held firm against the dollar week on week on the back of matched demand and supply, amid support from the central bank,” said Chris Nettey, head of trading at StanBic Ghana.

“We expect the narrative to remain the same through the coming sessions ahead of the budget reading on the 24th November,” Nettey said.

Tanzania

Tanzania’s shilling is expected to hold steady next week with great support for inflows from agricultural exports.

Commercial banks quoted the shilling at 2,327/2,337 on Thursday, unchanged from last week’s close.

“Agri-commodity sales including cashew nuts and NGO inflows have helped keep the shilling stable in recent weeks, and with the country managing to keep annual inflation relatively low at 4.9% in October, we expect the shilling to continue holding firm against the dollar in the week ahead,” Kristine Van Helsdingen, a dealer at Nairobi-based FX trading firm AZA Finance, said.


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