Jan 4, 2024

Nigeria’s naira and the Kenyan and Ugandan shillings are expected to weaken in the next week to Thursday, while Ghana’s cedi and Zambia’s kwacha could be steady, traders said.

KENYA
Kenya’s shilling is seen falling on increased demand for dollars from sectors including manufacturing.

Commercial banks quoted the shilling at 157.00/158.00 per U.S. dollar, compared with last Thursday’s close of 156.50/157.50.

“It (dollar demand) is just across industry; manufacturing and so on. It (the shilling) continues to weaken,” one trader said.

Traders said the central bank had agreed with banks late last month to allow bid-ask spreads of up to 1 shilling, up from a 20-cent spread previously.

UGANDA
Uganda’s shilling is expected to weaken, undermined by dollar demand from the energy sector and general goods importers.

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 exerting significant (dollar) demand, I would anticipate that will be a key dynamic in the coming days,” one trader said.

He said the shilling was likely to trade in the 3,800-3,840 range in the next week.

NIGERIA
Nigeria’s naira is likely to drop on the official market to trade close to levels on the unofficial market owing to dollar shortages and as businesses resume activity after the Christmas break.

The naira was quoted at 899 to the dollar on the official market on Thursday, versus 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,” one trader said.

GHANA
Ghana’s cedi is expected to be broadly stable as trading activity is yet to pick up on the interbank market.

LSEG data showed the cedi at 11.9000 to the dollar on Thursday, the same as at last Thursday’s close.

“The cedi has been largely stable against the dollar to start the year, with the market quiet as many participants have not yet returned from their holiday breaks,” said Sedem Dornoo, a senior trader at Absa Bank Ghana.

“We expect this narrative to persist.”

ZAMBIA
Zambia’s kwacha will probably be steady, propped by up central bank interventions after a sustained slide.

On Thursday the kwacha was trading at 25.75 per dollar, weaker than 25.20 per dollar on Dec. 21.

Zambia’s central bank sold $74 million in Wednesday’s trading session to buttress the local currency, Access Bank said.

REUTERS