AFRICA-FX-Nigerian, Kenyan and Zambian currencies seen under pressure

Nigerian naira banknotes are seen in this picture illustration, September 10, 2018. REUTERS/Afolabi Sotunde/Illustration/File Photo

AFRICA-FX-Nigerian, Kenyan, and Zambian currencies are under pressure. While Ghana’s cedi and Uganda’s shilling will likely remain steady, traders predicted pressure on Nigeria’s naira, Kenya’s shilling, and Zambia’s kwacha throughout the next week until Thursday.

Before the year ends, it is anticipated that demand for foreign currencies will increase across all sectors, which would cause the Kenyan shilling to continue its slow decline.

The shilling was quoted by commercial banks at 152.70/90 per US dollar, down from its closing rate of 152.20/40 on Thursday. According to LSEG statistics, the shilling fell to a new all-time low of 152.75/95 on Thursday.

Due to the central bank’s failure to settle outstanding foreign-currency payments owing in forward arrangements, the value of Nigeria’s naira is expected to decline on the black market.

Nigeria’s corporations purchased around $7 billion of maturing foreign exchange forwards from local banks.

On Thursday, the naira traded freely for 1,160 to the dollar on the open market, down from 1,130 naira a week earlier. Following a dip as low as 1,051 naira in early trade, the unit traded at about 800 naira per dollar in official trading on Thursday afternoon.

“I expect (exchange) rates to hover between 1,160 naira and 1,200 naira on the parallel market next week,” a dealer stated. “We had expected that the central bank would pay off outstanding forwards … (but) they paid little in bits.”

According to dealers, the anticipated FX inflows from a syndicated loan on cocoa are projected to keep Ghana’s cedi steady next week.

By the end of the month, banks and Ghana’s cocoa marketing body, COCOBOD, intend to finalize a $800 million syndicated loan.

According to LSEG statistics, the cedi was trading at 11.9000 to the dollar on Thursday, down from 11.9000 at the close of last Thursday.

Sedem Dornoo, a senior trader at Absa Bank Ghana, stated, “We expect it to be relatively stable in the coming week, following news that COCOBOD has completed the highly anticipated $800 million syndicated loan.”

“We expect the pair to remain range bound for the remainder of the year,” he stated.

Remittance inflows of complex cash support the consistent range in which the Ugandan shilling is trading.

The shilling was quoted by commercial banks at 3,785/3,795 to the dollar, down from the closing of 3,775/3,785 last Thursday.

An independent foreign exchange broker in Kampala, the country’s capital, stated, “We have been seeing substantial amounts of (dollar) inflows from remittances coming in which I think will continue to provide support well into mid December.”

He predicted that the shilling would probably fluctuate between 3,750 and 3,790 in the upcoming days.

Zambia’s kwacha is expected to face mild pressure due to the market’s strong demand and muted foreign currency supplies.

Based on LSEG statistics, the currency was trading at 23.3500 to the dollar on Thursday, down from 23.0695 at the end of the previous week.

The kwacha was negatively impacted by delays in the nation’s debt restructuring, according to Bank of Zambia Governor Denny Kalyalya, who made this announcement on Wednesday.


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