AFRICA-FX-Kenya’s currency could find support, Zambia’s under pressure

(Reuters) – Kenya’s shilling could find support in the next week to Thursday, but Zambia’s kwacha is seen staying under pressure while the Ugandan shilling and Ghanaian cedi could gain, traders said.


Kenya’s shilling could halt its long-running slide against the dollar, drawing support from foreign-currency inflows from tourism and reduced dollar demand from the fuel and manufacturing sectors.

Commercial banks quoted the shilling at 153.20/40 per U.S. dollar, compared with last Thursday’s closing rate of 153.15/35.

This week Kenya’s central bank unveiled a big interest rate hike aimed at stabilising the shilling, which has lost about 19.5% against the dollar this year.

The bank said the shilling’s depreciation had spurred price pressures, curbed foreign investment and hampered debt-servicing.


Uganda’s shilling is seen showing a strengthening bias on remittance flows and a central bank decision to maintain a tight policy stance.

Commercial banks quoted the shilling at 3,775/3,785 to the dollar, compared to last Thursday’s close of 3,815/3,825.

“There are remittances flowing in but also the central bank decision is driving a positive sentiment for the unit,” a trader said, referring to the Bank of Uganda’s Wednesday decision to maintain its policy rate at 9.5%.

The local unit would likely trade in a range of 3,750-3,780 to the dollar in the days ahead, he said.


Zambia’s kwacha is likely to remain under modest pressure due to sustained hard-currency demand and minimal supply.

On Thursday the kwacha, which has been setting record lows, was trading at 24.25 per dollar from 23.70 at the close of business a week ago, according to LSEG data.

“The local unit is anticipated to trade bearish in the short term,” Access Bank said in a note.


Ghana’s cedi is expected to strengthen next week due to muted corporate dollar demand and improved supply on the interbank market.

LSEG data showed the cedi trading at 11.95 to the dollar on Thursday, the same as last Thursday’s close.

“The cedi has posted gains in recent sessions as FX liquidity has improved and corporate demand has reduced. We’ve also seen some banks sell hard currency in a bid to unlock cedi liquidity following the new tighter monetary policy measures implemented last week,” said Sedem Dornoo, a senior trader at Absa Bank Ghana.

“There is still room for the local unit to strengthen in the coming week as corporate demand is expected to remain lacklustre,” he said.

(Reporting by Hereward Holland, Chris Mfula, Christian Akorlie and Elias Biryabarema; Editing by Alexander Winning)