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A Reuters Foreign Exchange (FX) tracker has projected that the Zambian kwacha and Nigerian naira would strengthen further against the US dollar over the next week, while the currencies of Kenya and Uganda are expected to remain stable.
Ghana’s cedi, however, is seen weakening.
The report noted that Zambia’s kwacha was likely to continue trading on a stronger footing, supported by improving macroeconomic fundamentals and resilient copper prices.
By Thursday, the kwacha was trading at K19.09 per dollar, an improvement from K20.29 a week earlier.
Economist, Kelvin Chisanga, said the Bank of Zambia’s recent measures restricting the use of foreign currency were also helping shore up the local unit.
Nigeria’s naira is also expected to post further gains as foreign-exchange supply improves, buoyed by strong oil receipts and renewed interest from foreign investors attracted by high domestic bond yields.
The Naira was trading around 1,445 per dollar in street markets on Thursday.
“Market sentiment has swung firmly bullish on the naira, lifted by high oil prices and clearer FX rules. If the upcoming bond auction is strongly oversubscribed, liquidity could tighten further and push the currency toward the 1,350 level,” one trader said.
For Kenya, the shilling is forecast to remain stable as dollar demand from manufacturers and oil marketers continues to be matched by steady inflows from the tourism and horticulture sectors.
Commercial banks quoted the shilling at 128.90/129.10 per dollar, unchanged from the previous Thursday.
“It has been steady. Supply and demand has been equally matched,” a trader told Reuters.
Uganda’s shilling is also expected to hold firm ahead of a central bank interest rate announcement on Monday.
Its direction thereafter will likely depend on the monetary policy decision.
Banks quoted the shilling at 3,553/3,563 per dollar, slightly firmer than last week’s 3,561/3,571.
In contrast, Ghana’s cedi is likely to face renewed pressure next week due to persistent demand for hard currency from key sectors, including energy. LSEG data showed the cedi trading at 10.95 per dollar, down from 10.90 a week ago.
“A stronger dollar is likely to persist in coming sessions, spurred by unfilled demand observed at recent central bank FX auctions,” said Andrews Akoto, head of trading at Absa Bank Ghana.
Another trader noted that the cedi had shown gradual weakness in recent days as dollar demand continued to outstrip supply.
“The cedi is likely to weaken further in the coming week,” the trader added.
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