Currency Outlook: Trends Across African Markets
Kenya
In the upcoming week, Kenya’s shilling is anticipated to continue its upward trajectory against the dollar. This surge is bolstered by robust inflows of hard currency from the agricultural sector, coupled with subdued demand from fuel importers and manufacturers. Current rates stand at 130.50/131.50 per dollar, exhibiting a notable improvement from the previous week’s closure at 134.50/135.50. Traders remain optimistic, citing stable support around the 130 level, with expectations of further strengthening fueled by tea exports.
Nigeria
Conversely, Nigeria’s naira faces a potential weakening trend as firms repatriate dividends abroad, intensifying dollar demand amidst reduced liquidity in the official market. The naira stood at 1,448 to the dollar in official markets, reflecting a decline from 1,400 a week earlier. Street trading observed rates around 1,449 naira. With quotes hovering around 1440/50 levels, the absence of central bank intervention could see rates reaching 1500 naira levels. The ongoing dividend season amplifies foreign exchange demands, exacerbating the pressure on the naira.
Ghana
Ghana’s cedi is poised for further depreciation next week, attributed to heightened demand from energy sector corporates for dollar imports amidst constrained supply. Recent data from LSEG depicted the cedi trading at 13.9000 to the dollar, down from 13.7000 the preceding week. A senior trader at Absa Bank Ghana highlighted the cedi’s vulnerability due to limited FX liquidity and escalating demand from local corporates, primarily in the energy sector. Consequently, the cedi is expected to face sustained pressure in the upcoming week.
Uganda
In contrast, the Ugandan shilling is anticipated to maintain stability in the forthcoming days, supported by reduced demand for hard currency as major corporations adjust their activities ahead of mid-month tax obligations. Commercial banks quoted the shilling at 3,775/3,785, unchanged from the previous close. Diminished appetite for dollars, coupled with healthy inflows from coffee exporters, is expected to anchor the shilling within the 3,750-3,790 range.
Zambia
Zambia’s kwacha is forecasted to sustain pressure against the dollar in the upcoming week due to sustained demand for hard currency, notably for agricultural and energy sector imports. Recent trading saw the kwacha quoted at 27.25 per dollar, reflecting a slight uptick from the previous week’s closure at 26.90. Access Bank projects marginal losses in the short term, attributing the kwacha’s challenges to hard currency shortages exacerbated by a debilitating drought and resultant electricity rationing.
Overall, divergent trends are anticipated across African currency markets, reflecting the unique economic dynamics and external factors influencing each nation’s currency performance.
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