By In the coming week, the currencies of Kenya, Uganda, Ghana, and Zambia are forecasted to maintain relative stability, while Nigeria’s naira may face depreciation pressures, according to market traders.
Kenya
The Kenyan shilling is anticipated to remain relatively unchanged throughout the upcoming week, continuing a period of stability that has persisted for approximately a month. According to data from LSEG, the shilling traded at 128.50/129.50 per U.S. dollar on Thursday, a slight shift from the 128.25/129.25 rate recorded at the previous week’s close.
A trader remarked, “We’re stuck within this range; the shilling has reached a stable zone.” Earlier this year, the Kenyan shilling saw strong performance due to easing concerns over the country’s ability to meet its $2 billion Eurobond maturity in June. However, since April, momentum has slowed.
Nigeria
Nigeria’s naira may experience further weakening due to increased demand for foreign currency, despite the government raising $900 million through a domestic dollar bond issuance. LSEG data showed the naira trading at 1,650 per dollar in the official market on Thursday, aligning with rates seen in street trading. This represents a drop from the previous week’s official closing rate of 1,592 naira.
One trader explained, “The dollar raise in itself does not translate to an appreciation until the central bank releases those dollars into the market. Demand is overpowering supply.” The trader added that increased interventions by the central bank could potentially stabilize the naira, but recent interventions have been insufficient to curb depreciation pressures.
Ghana
Ghana’s cedi is expected to maintain relative stability, supported by subdued foreign-currency demand and ongoing central bank interventions. The cedi traded at 15.65 per dollar on Thursday, a marginal increase from 15.62 a week prior, according to LSEG data.
Senior trader Sedem Dornoo from Absa Bank Ghana noted, “The cedi has traded relatively stable against the dollar over the past week, with minimal interbank activity. Corporate demand has also decreased.” He predicted that the currency would likely remain stable in the near term. Another trader agreed, suggesting that central bank support would likely anchor the currency for the time being.
Uganda
Uganda’s shilling is predicted to trade within a tight range, bolstered by low demand for U.S. dollars as local firms prepare for mid-month tax payments. On Thursday, the shilling was quoted at 3,715/3,725 per dollar, compared to the previous week’s close of 3,716/3,726.
“With mid-month tax payments approaching, I expect the local unit to gain some support,” one trader stated. The trader also anticipated that the shilling would fluctuate between 3,700 and 3,730 per dollar in the next week.
Zambia
Zambia’s kwacha is likely to remain stable, supported by companies selling U.S. dollars in preparation for tax payments. As of Thursday, the kwacha was quoted at 26.25 per dollar, a slight improvement from the previous week’s 26.30 rate.
“We have VAT payments due mid-next week, and this should support the local unit,” commented a financial analyst, pointing to tax obligations as a key factor likely to stabilize the kwacha in the short term.
Source: Reuters
