JOHANNESBURG (Reuters) -Kenya’s shilling and Ghana’s cedi are expected to weaken against the dollar in the next week to Thursday, while Uganda’s shilling and Nigeria’s naira will hold steady, traders said.
Kenya’s shilling is expected to remain on a downward trajectory in the coming week as month-end demand for dollars weigh on the local currency, which has been under sustained pressure from oil importers and the manufacturing sector.
Commercial banks quoted the shilling at 138.15/138.35 per dollar – its lowest ever level – compared with last Thursday’s close of 137.40/60.
The shilling is expected to remain weak for the foreseeable future, with the month-end demand for dollars also weighing on the currency, one trader with a commercial bank said.
The shilling is down over 10.7% against the dollar this year and has hit repeated lows, Refinitiv data showed.
The Ugandan shilling was expected to be broadly stable, supported by typical month-end dollar inflows from non-governmental organisations, traders said.
Commercial banks quoted the shilling at 3,725/3,735, compared with last Thursday’s close of 3,720/3,730.
A trader from one commercial bank said they anticipated dollar inflows from non-governmental organisations and some commodity exporters that typically surge toward month-end.
“Those flows should keep the local unit supported in the short term,” he said.
Non-governmental organisations which receive their donations in hard currency typically do conversions at end of month to meet operational expenses like salaries.
Ghana’s cedi could come under pressure due to an expected pick-up in dollar demand from the energy and commerce sectors. Refinitiv Eikon data showed the cedi trading at 10.8500 to the dollar on Thursday, compared to 10.5500 at last Thursday’s close. The currency has remained fairly strong since Ghana secured a $3 billion IMF deal last week with an immediate disbursement of $600 million. “We are likely to see a stronger dollar in the coming week as we expect a return of FX demand from local corporates, particularly from the energy and commerce sectors,” said Andrews Akoto, Head of Trading at Absa Bank Ghana Limited.
Nigeria’s naira is seen holding steady on the spot market as president-elect Bola Tinubu takes office next week and traders anticipate changes to the country’s multiple exchange rate policy which has put pressure on the currency under the outgoing administration, traders said.
The naira traded at 465 naira to the dollar on the official market on Thursday, within a new range of 462 to 467 it has settled into this month. It was quoted at 765 per dollar on the parallel market on Thursday.
“We expect no major change in the coming week,” one trader said. “Once our new president is sworn in, we could see a more significant change on the foreign exchange market.”
Tinubu has said he will let markets determine exchange rates which could effectively lead to a devaluation of the naira.
(Reporting by Bhargav Acharya, Christian Akorlie, Elias Biryabarema and Chijioke Ohuocha; Compiled by George Obulutsa)