NAIROBI, May 21 (Reuters) – The outlook for African currencies is mixed in the next week to Thursday, with those of Ghana, Kenya and Uganda expected to weaken, while Nigeria’s could be little changed and Zambia’s may strengthen, traders said.
Ghana
Ghana’s cedi could fall further, pressured by unmet corporate demand for hard currency on the interbank market.
LSEG data showed the cedi trading at 11.56 to the dollar, compared to 11.30 a week earlier.
“Energy sector and dividend repatriation-driven FX demand is expected to persist through the coming week,” one trader said.
The trader said bids exceeding $500 million at each of the last two central bank auctions pointed to a significant backlog that needed to be filled.
Another trader said high oil prices due to the Iran war were also fuelling increased dollar demand from oil importers.
Kenya
Kenya’s shilling may weaken slightly, as risks linked to local fuel protests and the Iran war weigh on sentiment.
The shilling was trading at around 129.25/129.55 per dollar on Thursday, close to the level it closed a week earlier.
Next week’s end-of-month dynamics are expected to generate strong dollar demand, though healthy inflows should offset that to some extent.
Traders cited fuel protests as a key domestic risk, after Kenya’s public transport operators gave the government until Tuesday next week to lower fuel prices, warning they could strike again if their demands are not met.
Uganda
Uganda’s shilling is seen trading with a weakening bias in the coming days, undercut by strong dollar demand from importers in the energy and manufacturing sectors.
Commercial banks quoted the shilling at 3,775/3,785 to the dollar, compared to last Thursday’s close of 3,735/3,745.
“We anticipate appetite from those two sectors (energy and manufacturing) will be the main dynamic driving the shilling’s direction in the short term,” a trader said, linking the energy sector demand to soaring global oil prices triggered by the conflict in the Middle East.
Nigeria
Nigeria’s naira should be broadly stable due to lacklustre dollar demand and ample supply.
The naira was quoted at 1,373 to the U.S. currency on the official market on Thursday, compared with 1,370 a week earlier.
The currency was changing hands at 1,395 to the dollar in street trading.
“The market has been relatively stable in the past two weeks. We should still trade around (these) levels,” a trader said.
Zambia
Zambia’s kwacha could gain some ground, buoyed by hard-currency inflows from the mining sector and foreign financial institutions.
Over the past week it has been relatively steady, quoted at 19.01 per dollar on Thursday from 18.98 a week ago.
