NAIROBI, Sept 12 (Askume) – Kenyan, Ugandan, Ghanaian and Zambian currencies are expected to remain broadly stable between next week and Thursday, while Nigeria’s currency is likely to fall, traders said.
Kenya
The Kenyan shilling is expected to be little changed in the coming week, continuing the recent stabilization that has lasted for about a month.
LSEG data showed the shilling was trading at 128.50/129.50 shillings against the dollar, while it closed at 128.25/129.25 shillings on Thursday.
“We are stuck in this range,” one trader said. “The shilling has reached stable territory.”
Stocks rose strongly at the start of the year, but lost momentum from April as concerns eased that the East African country would default on a $2 billion European bond due in June.
Nigeria
Although Nigeria raised $900 million by issuing domestic dollar bonds, the naira is likely to fall due to increased demand for foreign currency.
Data from the London Stock Exchange showed the naira traded at 1,650 naira to the dollar on the official market on Thursday, the same rate at which it changed hands in street trading.
This is compared to a closing price of about 1,592 naira a week ago.
“Unless the central bank puts those dollars into the market, the dollar’s appreciation itself will not translate into appreciation,” one trader said, adding, “demand tends to overwhelm supply.”
The trader said if the central bank increases its intervention in the currency market, it could support the naira, but its intervention would be very small.
Ghana
The cedi trade in Ghana has remained relatively stable amid weak foreign exchange demand and continued support from the central bank.
Data from the London Stock Exchange showed the cedi was trading at 15.65 to the dollar, compared with 15.62 a week ago.
Sedem Dornu, senior trader at the United Bank of Ghana, said: “The cedi has been relatively stable against the US dollar over the past week, with interbank activity low. Corporate demand has also declined in the last few trading days.”
“We expect the pair to remain relatively stable in the coming week,” he added.
Another trader said central bank intervention could stabilize the pair in the short term.
Uganda
The Ugandan shilling is expected to trade in a tight range in the coming days, supported by weak dollar demand as most companies retain their local currency for mid-month tax payments.
Commercial banks quoted the shilling at 3,715/3,725 per dollar, while last Thursday’s close was at 3,716/3,726 shillings.
“The mid-month tax payment is coming and I hope it will provide some help to the local units,” said a trader.
He said the local unit is likely to remain in the range of 3,700-3,730 against the dollar next week.
Zambia
The Zambian kwacha is expected to remain stable, supported by sales of the US dollar by companies preparing to pay taxes.
The kwacha rose to 26.25 to the dollar on Thursday from 26.30 a week ago.
A financial analyst said: “We will have VAT payments by the middle of next week, which should support the local area.”
