Kenya’s shilling, Zambia’s kwacha and Nigeria’s naira are expected to weaken against the dollar in the next week to Thursday, while the Ghanaian cedi is likely to strengthen and the Ugandan and Tanzanian currencies to hold steady, traders said.
Kenya’s shilling KES= is expected to weaken due to pent-up demand for dollars from various sectors of the economy.
Commercial banks quoted the shilling at 137.35/55 per dollar, compared with last Thursday’s close of 136.75/95.
On Wednesday, the shilling hit a new record low 137.50/70, according to Refinitiv data.
“We are still seeing the risk of further weakening,” a trader at one commercial bank said.
The trader said the shilling was expected to get a reprieve from funds coming in starting anytime this week from the International Monetary Fund, which would boost the country’s official foreign exchange reserves.
The Ugandan shilling UGX= is seen trading on a stable footing, underpinned by subdued appetite for hard currency from importers and commercial banks.
Commercial banks quoted the shilling at 3,715/3,725, the same as last Thursday’s close.
“The shilling is expected to swing in a tight range with market activity remaining thin,” said an independent foreign exchange trader in the capital Kampala.
He said market activity was expected to remain thin until the government budget for the fiscal year 2023/24 (July-June) is unveiled early next month as traders await market trend cues from spending and policy pronouncements in the budget speech.
Tanzania’s shilling TZS= is expected to hold steady as inflows from tourism and mining cushion the demand for dollars from nearly all sectors of the economy.
Commercial banks quoted the shilling at 2,355/2,365 on Thursday, the same levels recorded at last Thursday’s close.
“There is still high demand for the dollar from all sectors but … the shilling will remain in the same levels with inflows coming from normal operations, mining and tourism sectors,” said a trader from one commercial bank in Dar es Salaam.
The kwacha ZMW= is likely to trade on the weaker side against the dollar due to subdued hard currency inflows amid rising importer demand.
On Thursday, commercial banks quoted the currency of Africa’s second-largest copper producer at 18.8300 per dollar from 18.4500 at the close of business a week ago.
“The Kwacha is forecast to weaken further in the
near term,” Access Bank ACCESS.GH said in a note on Thursday.
Zambia’s central bank said on Wednesday pressures in the foreign exchange market were mostly due to demand for foreign exchange from a broad range of sectors, including wholesale and retail, financial, as well as electricity, gas and water supply.
Nigeria’s naira NGNP= could weaken on the parallel market after the central bank adjusted foreign exchange rates on the official market to cope with demand pressure, ahead of Friday’s currency auction and next week’s interest rate decision, traders said.
The naira was quoted at 752 per dollar on the parallel market on Thursday, from 745 naira a week ago. The unit traded at 467 naira on the official market on Thursday, outside a range of 460 to 462 where it has been stuck since the end of last year.
“The market is adjusting to the level where the central bank is trading,” one trader said.
“If there is further adjustment on the forward rate (on Friday), then we would see an adjustment on the spot.”
Ghana’s cedi GHS= is expected to strengthen next week on the back of the International Monetary Fund’s approval of a $3 billion loan, allowing for an immediate disbursement of about $600 million, and muted demand for forex.
Refinitive Eikon data showed the cedi trading at 10.3000 to the dollar on Thursday, compared to 11.4000 at last Thursday’s close.
“We expect the cedi to continue its rally against the dollar in the coming week,” said Andrews Akoto, head of trading at Absa Bank Ghana Limited.
Stanbic Bank Ghana trader Selasi Kabo also said he expected the upward trend to persist.