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WEEKAHEAD-AFRICA-FX-Kenyan, Zambian, Nigerian, Ghanaian currencies seen falling

FILE PHOTO: Kenya 10 shillings coins are seen in a plastic container inside a cashier's booth at a forex exchange bureau in Kenya's capital Nairobi, April 20, 2016. REUTERS/Thomas Mukoya

Kenya’s shilling, Zambia’s kwacha, Nigeria’s naira and Ghana’s cedi are expected to weaken in the next week to Thursday, while the Ugandan shilling is forecast to strengthen, traders said.


Kenya’s shilling KES= is expected to be undermined by increased demand for dollars, especially from the manufacturing and energy sectors.

Commercial banks quoted the shilling at 144.70/90 per U.S. dollar, compared with last Thursday’s closing rate of 144.20/40.

“It’s depreciated more. There is a bit of (foreign-currency) demand and very slow supply coming into the market. Demand is mostly (from) manufacturers,” one trader said.


Zambia’s kwacha ZMW= is likely to remain under modest pressure as the market continues to see low supply of foreign exchange and rising demand.

On Thursday, commercial banks quoted the currency of Africa’s second-largest copper producer at 19.7400 per dollar from 19.6900 a week ago.

Despite positive sentiment related to the external debt restructuring agreement reached with official creditors, demand for hard currency has been rising as the economy recovers post-COVID-19, the central bank has said.


Nigeria’s naira NGNP= could lose ground on the parallel market as expectations fade that the central bank will resume dollar sales to foreign-exchange bureaus.

The naira was quoted at 900 per dollar on the parallel market on Thursday from 860 naira last week, after the central bank set a trading margin for bureau de change operators without resuming dollar sales to them.

The unit was quoted at 776 naira NGN=D1 on the official market, where it has been trading between 740 to 780 naira supported by central bank interventions, one trader said.

“Once the official market does not get the needed liquidity, then demand will go to the parallel market and that will drive the rate there lower,” the trader said.


Ghana’s cedi GHS= is expected to continue depreciating as dollar demand outstrips inflows.

Refinitiv data showed the cedi trading at 11.3200 to the dollar on Thursday, compared to 11.0000 at last Thursday’s close.

“The cedi remained on the ropes this week, largely on the back of weaker FX flows. Demand from local corporates has also begun to ramp up,” said Sedem Dornoo, a senior trader at Absa Bank Ghana.

Another trader, Selasi Kabo from Stanbic Bank Ghana, said downward pressure on the cedi was likely to continue.


The Ugandan shilling UGX= is forecast to strengthen, helped by low demand for dollars thanks to slowing consumer activity.

Commercial banks quoted the shilling at 3,708/3,718 to the dollar, compared with last Thursday’s closing rate of 3,728/3,738.

“The main dynamic that I see driving the market in the short term is low activity on the (dollar) demand side which I think is connected to low consumer spending,” said one trader.

He said the shilling would likely trade in the 3,680-3,710 range in the coming days. The central bank this month said the tempo of economic activity seemed to be slowing down, which it said justified its decision to cut its benchmark rate.

Source : Nasdaq