As the foreign exchange markets in several African countries prepare for the upcoming week, currency traders are anticipating diverse movements against the U.S. dollar. Key currencies under scrutiny include the Kenyan shilling, Ghana’s cedi, Uganda’s shilling, Nigeria’s naira, and Zambia’s kwacha.
Kenya’s shilling is anticipated to experience a weakening trend against the U.S. dollar in the coming week. The current exchange rate stands at 159.00/160 per dollar, representing an all-time low. Increased demand for dollars across various sectors, coupled with low inflows, is cited as a primary factor contributing to the expected depreciation. The surge in demand, particularly from importers ordering goods from China ahead of the Lunar New Year holiday, is driving the weakening trend.
Ghana: Cedi Faces Pressure Amid Sectoral Demand
Ghana’s cedi is expected to face pressure due to heightened demand from the manufacturing and energy sectors, combined with limited dollar supplies. Trading at 11.9200 to the dollar, compared to the previous week’s close of 11.9000, the cedi is likely to experience marginal pressure in the coming week. Positive statements from the International Monetary Fund regarding debt restructuring talks between Ghana and official bilateral creditors may offer some support to the cedi.
Uganda: Shilling Stability Amid Tax Payments
The Ugandan shilling is anticipated to remain stable, with mid-month tax payments prompting companies to moderate their demand for dollars. Commercial banks quote the shilling at 3,795/3,805, maintaining relative stability compared to the previous week’s close. Corporates preparing to fulfill mid-month tax obligations are expected to soften their demand for dollars, allowing the shilling to trade mostly around 3,800 against the dollar.
Nigeria: Naira Stability with Occasional Drops
Nigeria’s naira is projected to trade around its current level on the official market, occasionally approaching parallel market levels in thin trading conditions. The official market quotes the naira at 791 to the dollar, while the parallel market hovers around 1,260 naira. Recent announcements from the Central Bank of Nigeria (CBN) regarding forex backlog payments to foreign airlines have contributed positively to market confidence, setting a favorable tone for the year.
Zambia: Kwacha Faces Persistent Pressure
Zambia’s kwacha is expected to continue facing downward pressure against the U.S. dollar, characterized by high demand for hard currency and limited inflows. Trading at 26.05 per dollar, the kwacha has depreciated from 25.75 in the previous week. The local currency is projected to follow a downward trajectory unless there is a shift in current market trends.
As these African currencies navigate various challenges and influences, market participants will closely monitor developments and external factors shaping their trajectories in the coming week. Economic indicators, geopolitical events, and government policies will play pivotal roles in determining the currencies’ performances against the U.S. dollar.
