Reuters logo
WEEKAHEAD-AFRICA-FX-African currencies weaken as dollar demand weighs
May 28, 2015 / 2:38 PM / 2 years ago

WEEKAHEAD-AFRICA-FX-African currencies weaken as dollar demand weighs

NAIROBI, May 28 (Reuters) - African currencies are seen weaker next week but dealers in Nigeria said they hoped the central bank could relax its foreign exchange trade restrictions under a new government due to take office on Friday.

KENYA

The shilling is expected to weaken after hitting a new low last seen in Nov. 2011 this week due to dollar demand from importers but tight liquidity and possible central bank dollar sales may slow down the decline.

At 1225 GMT, commercial banks quoted the shilling at 97.80/98.00 to the dollar from 97.00/10 a week ago, after the central bank pumped dollars into the market.

“I think it’s just on the back of sustained demand, with little supply,” a senior trader at one commercial bank said, referring to the shilling’s steady decline.

The shilling had hit an intraday low of 98.95/99.05 earlier on Thursday, hurt by a stronger dollar, slowing foreign exchange proceeds due to reduced tourist arrivals, and a widening current account deficit due to demand for imports like capital goods.

TANZANIA

The shilling is expected to face more pressure, weighed down by subdued hard currency inflows and strong demand for greenbacks from energy and manufacturing sectors after tumbling to a new record low this week.

Commercial banks quoted the shilling at 2,075/2,085 to the dollar, weaker than 2,030/2,040 a week ago.

“The shilling is under pressure because there are no dollar inflows, while there is big demand for the U.S. currency,” said Theopistar Mnale, a dealer at TIB Development Bank.

UGANDA

The shilling is likely to trade on a weaker footing, partly weighed down by month-end corporate dollar demand.

At 1021 GMT commercial banks quoted the shilling at 3,053/3,063, weaker than last Thursday’s close of 2,990/3,000.

“I think we’ll continue to have strong month-end demand from corporates in import business as we have already seen this week,” said Shahzad Kamaluddin, trader at Crane Bank.

So far this year the Ugandan shilling is 9.3 percent weaker against the greenback and is seen losing more ground as Uganda’s weak external trade balance position saps market confidence.

GHANA

The cedi is expected to remain under pressure after hitting new lows this week on increased dollar buying, driven by a surge in oil imports and exchange rate uncertainty.

The local unit traded at 4.0500-4.0700 by 1030 GMT on Thursday, down nearly 19 percent since January, from 4.0100-4.0300 last Thursday.

“The cedi’s depreciation could be worsened by traders’ uncertainty about its stability in the coming weeks and months,” Joseph Biggles Amponsah of the Accra-based Dortis Research said.

ZAMBIA

The kwacha is expected to remain on the back foot next week due to high demand for dollars after last week’s government bond auction.

At 1153 GMT on Thursday, commercial banks quoted the currency of Africa’s second leading copper producer at 7.2700 per dollar, down from a close of 7.0800 a week ago.

“It is expected to remain under pressure because the appreciation had no firm basis as it was anchored on an event. It should settle around 7.4-7.5,” analyst Maambo Hamaundu said.

NIGERIA

The naira is seen unchanged at the present level in the near term, but dealers hoped for a gradual rejuvenation of the forex market after a new government takes office on Friday.

Nigeria’s president-elect Mohammadu Buhari will take office on Friday and dealers hoped the central bank could relax its restrictions under the new regime.

The naira was trading at 198.50 to the dollar on Thursday at 1156 GMT, unchanged from last week as the market remains inactive due to central bank’s restrictions since February.

“Nothing major is expected to happen in the immediately, but we hope to see a realignment of policies as soon as the new government unveils its policy direction,” a dealer said. (Reporting by George Obulutsa, Fumbuka Ng‘wanakilala, Elias Biryabarema, Kwasi Kpodo, Chris Mfula and Oludare Mayowa; Editing by James Macharia)

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below