NAIROBI (Reuters) – Kenya’s shilling, Ghana’s cedi and Zambia’s kwacha are seen weakening against the dollar in the coming week, while Uganda’s shilling and Nigeria’s naira are expected to hold steady, traders said on Thursday.
Kenya’s shilling is expected to weaken due to increased demand for dollars from all sectors of the economy and low inflows.
Commercial banks quoted the shilling at 159.00/160 per dollar, from last Thursday’s closing rate of 157.00/158.00.
The current level is an all-time low, LSEG data showed.
“There is a pile-up in (dollar) demand from across all sectors. We still see the (weakening) trend continuing,” a trader at one commercial bank said.
The trader said the demand was especially high from importers ordering goods from China before their counterparts closed for the week-long Lunar New Year holiday break.
Ghana’s cedi is expected to come under pressure due to increased demand from the manufacturing and energy sectors amid low dollar supplies, traders said.
LSEG data showed the cedi trading at 11.9200 to the dollar on Thursday, compared to 11.9000 at last Thursday’s close.
“The bulk of the demand has been from the manufacturing sector. We expect to see some marginal pressure on the cedi in the coming week as demand continues to tick up,” said Sedem Dornoo, a senior trader Absa Bank Ghana.
Head of Trading at Stanbic Bank Ghana, Chris Nettey, said positive statements from the International Monetary Fund regarding talks between Ghana and its official bilateral creditors about debt restructuring “should give some support to the cedi in the coming sessions”.
The Ugandan shilling is expected to hold steady as pending mid-month tax payments force firms to trim back their demand for dollars.
Commercial banks quoted the shilling at 3,795/3,805, compared with last Thursday’s close of 3,805/3,815. “Corporates will be preparing to clear their mid-month tax obligations which normally softens their demand for dollars,” said a trader at one commercial bank. He said the shilling was likely to trade mostly around 3,800 against the dollar in the coming days.
Nigeria’s naira is likely to trade around its current level on the official market, but occasionally drop close to levels on the parallel market in thin trading, traders said.
The naira was quoted at 791 to the dollar on the official market on Thursday. This compares with around 1,260 naira on the parallel market.
On Monday, the Central Bank of Nigeria (CBN) said it recently paid $61.64 million of foreign exchange backlog owed to foreign airlines, bringing the outstanding forex forwards it has paid in the last three months to $2 billion.
“The news from the CBN on the recent forex backlog payment was timely. It has helped to set the tone very early in the year and I think this will help to boost market confidence,” one trader said.
The kwacha is expected to remain under pressure against the dollar as the market continues to witness high hard currency demand and low inflows.
On Thursday, the currency of Africa’s second-largest copper producer was trading at 26.05 per dollar, from 25.75 a week ago.
“The local currency is expected to follow a downward trajectory given that current market trends hold,” Access Bank said in a note on Thursday.
(Reporting by George Obulutsa, Elias Biryabarema, Christian Akorlie, Chris Mfula and Elisha Bala-Gbogbo; Editing by Nellie Peyton and Alexander Smith)