Kenya, Nigeria, and Zambia’s currencies are expected to weaken next week, while Ghana’s cedi remains stable and Uganda’s shilling may appreciate slightly. Key factors include dividend payments, foreign currency demand, and central bank interventions.
The currencies of Kenya, Nigeria, and Zambia are forecasted to face pressure in the upcoming week, while Ghana’s currency is expected to remain stable and Uganda’s may appreciate against the dollar, according to market traders.
In Kenya, the shilling is anticipated to weaken as some banks disburse dividends from the previous year. The commercial banks quoted the shilling at 129.30/129.50 to the U.S. dollar, up from 129.00/129.40 last Thursday. A trader indicated that increased dollar purchases by banks for dividend repatriation could further weaken the currency if the central bank does not intervene.
Nigeria’s naira is also projected to decline in both official and parallel markets due to foreign currency demand surpassing central bank supply. Traders noted the naira being quoted at approximately 1,550 to the dollar during intraday trading, compared to 1,520 naira a previous week. One trader expressed concerns, stating that unless supply improves, rates are likely to fall further.
In contrast, Ghana’s cedi is expected to maintain stability owing to central bank support. On Thursday, data revealed the cedi remained unchanged at 15.45 to the dollar. Chris Nettey, from Stanbic Bank Ghana, mentioned that the cedi’s stability is supported by balanced demand and supply through the central bank’s foreign exchange auctions.
Uganda anticipates a stronger shilling ahead of mid-month tax payments. The banks quoted the shilling at 3,662/3,672 to the dollar, a slight increase from the previous week. A trader noted that as companies address their tax obligations, demand for dollars may decrease, allowing the shilling to gain strength in the short term.
Finally, Zambia’s kwacha is expected to remain under pressure due to increased demand for foreign currency alongside limited supply. The kwacha was quoted at 28.58, a decrease from 28.70 a week earlier. Access Bank noted that while foreign currency conversions may not lead to gains, they could potentially slow the currency’s depreciation caused by rising imports in recent months.
In summary, the currencies of Kenya, Nigeria, and Zambia are projected to be under pressure due to various factors such as dividend repatriation and foreign currency demand exceeding supply. Conversely, Ghana’s cedi remains stable due to central bank intervention, while Uganda’s shilling may strengthen due to tax payments. The kwacha in Zambia continues to face challenges related to increasing imports and currency conversion limitations.
Original Source: www.tradingview.com
