African currencies are expected to trade on divergent paths over the coming week, with Ghana, Kenya and Uganda seen under pressure from rising dollar demand and external shocks, while Nigeria’s naira is projected to remain broadly stable and Zambia’s kwacha could strengthen, according to market participants.
The outlook reflects a combination of global factors, including elevated oil prices linked to geopolitical tensions in the Middle East, as well as domestic dynamics ranging from corporate foreign exchange demand to political and social unrest.
In West Africa, the cedi is expected to remain under pressure as unmet demand for foreign exchange continues to weigh on sentiment. The currency has already weakened in recent days, trading at around 11.56 to the dollar compared with 11.30 a week earlier, according to market data.
Traders say demand from the energy sector and dividend repatriation by foreign firms continues to outstrip available supply on the interbank market. The imbalance has been compounded by repeated central bank auctions attracting large bids, in some cases exceeding $500 million, highlighting a persistent backlog of unmet FX requests.
Rising global oil prices, driven in part by renewed geopolitical tensions involving Iran, have also increased foreign currency demand from importers in the energy sector, further pressuring the local unit.
In East Africa, the Kenyan shilling is expected to weaken slightly, with sentiment affected by both external and domestic risks. The currency has remained relatively steady, trading around 129.25/129.55 per dollar, but traders warn that pressures could build in the near term.
End-of-month corporate demand for dollars is expected to rise, even as inflows from exports and remittances provide partial support. However, concerns over domestic fuel protests have added a layer of uncertainty.
Transport operators in Kenya have warned of renewed industrial action if fuel prices are not reduced, raising the risk of disruptions that could weigh on investor confidence and currency stability.
Uganda’s shilling is also expected to trade with a weakening bias in the short term. The currency has already softened to around 3,775/3,785 per dollar from 3,735/3,745 a week earlier, reflecting sustained dollar demand.
Traders attribute the pressure largely to importers in the energy and manufacturing sectors, both of which are increasing foreign exchange purchases amid higher global oil prices. The increase in crude prices has been linked to ongoing instability in the Middle East, which continues to ripple through emerging market currencies.
In contrast, Nigeria’s naira is expected to remain broadly stable, supported by relatively balanced foreign exchange supply and subdued demand. The currency was quoted at around 1,373 to the dollar on the official market, compared with 1,370 a week earlier, while trading on the parallel market was slightly weaker at about 1,395.
Market participants say liquidity conditions have improved in recent weeks, helping to anchor the naira within a narrow range. Traders expect continued stability in the absence of major shocks, with current levels likely to persist in the short term.
Further south, Zambia’s kwacha is seen as the only currency with a potential for modest gains. The unit has been relatively steady, trading at around 19.01 per dollar compared with 18.98 a week earlier.
Analysts point to sustained hard-currency inflows from the mining sector, as well as support from foreign financial institutions, as key drivers of resilience. Zambia’s reliance on copper exports continues to play a stabilising role, particularly when global commodity demand remains firm.
Overall, the mixed performance underscores the varying external vulnerabilities and domestic policy conditions shaping African foreign exchange markets. While some currencies remain exposed to import demand and geopolitical shocks, others are benefiting from commodity-linked inflows and improved liquidity management.
Traders caution that volatility could persist in the near term, particularly if global oil prices remain elevated and domestic political risks intensify across parts of the continent.
