Kenya, Nigeria, and Zambia face currency pressures, while Ghana remains stable. Uganda’s shilling may appreciate due to tax payments. Key trends include Kenya’s dividend repatriation, Nigeria’s supply-demand imbalance, Ghana’s central bank support, Uganda’s tax effects, and Zambia’s import impacts.
The currencies of Kenya, Nigeria, and Zambia are anticipated to face pressure, while the Ghanaian cedi is expected to remain stable and the Ugandan shilling may strengthen against the dollar. Traders indicate that this trend will likely persist up to Thursday of next week.
In Kenya, the shilling (USDKES) is projected to weaken as banks pay dividends from the previous year. As of Thursday, commercial banks quoted the shilling at 129.30/129.50 to the dollar, a decrease from the prior week’s 129.00/129.40. “As banks announce their results, offshore people will be looking to buy dollars to repatriate their dividends,” one trader noted, indicating potential further weakening if the central bank does not intervene.
Nigeria’s naira is expected to lose value in both the official and parallel markets, driven by demand exceeding central bank supply. On Thursday, the naira (USDNGN) was around 1,550 to the dollar, rising from last week’s 1,520. In street trading, it was at approximately 1,570 naira to the dollar. A trader commented, “Rising dollar demand has upset the stable rates we’ve seen… and the gap with the black market is now opening up again.”
Conversely, Ghana’s cedi (USDGHS) is expected to remain stable, with central bank support being a significant factor. As of Thursday, the cedi stood at 15.45 to the dollar, unchanged from the previous week. Chris Nettey, head of trading at Stanbic Bank Ghana, remarked, “Cedi has maintained its stability this week amid matched demand and supply.”
The Ugandan shilling (USDUGX) is likely to strengthen as companies prepare for mid-month tax payments. On Thursday, it was quoted at 3,662/3,672 to the dollar, slightly up from last week’s 3,665/3,675. A trader anticipated reduced dollar demand as firms clear tax obligations, predicting the shilling may trade between 3,630-3,660 against the dollar.
Zambia’s kwacha (USDZMW) is expected to remain under pressure due to increasing hard currency demand and limited supply. On Thursday, it was quoted at 28.58, down from 28.70 a week earlier. Access Bank noted that foreign currency conversions might not be enough for gains, suggesting these would merely mitigate depreciation, influenced also by rising imports of food and electricity.
In summary, Kenya, Nigeria, and Zambia’s currencies are predicted to face increased pressure due to various economic factors, including dividend repatriation and rising import demands. In contrast, Ghana’s cedi is expected to remain stable, bolstered by central bank interventions, while Uganda’s shilling may gain strength amid tax preparations. This scenario emphasizes the interplay of supply and demand in foreign currency markets across these African nations.
Original Source: www.tradingview.com
