Most major African currencies are expected to remain broadly stable over the coming week, supported by easing demand for U.S. dollars, improving export earnings and central bank interventions, although Ghana’s cedi is forecast to remain under pressure, according to market participants.
In Nigeria, traders expect the naira to remain supported by dollar sales from the Central Bank of Nigeria. The currency traded at 1,375 per U.S. dollar on the official market on Thursday, compared with 1,377 a week earlier, while the parallel market rate stood at about 1,395 per dollar.
One trader said the naira is expected to trade within a range of 1,375 to 1,380 per dollar over the next week, noting that foreign exchange selling linked to half-year profit-taking has begun to ease.
In Uganda, the shilling is also expected to remain stable as demand for foreign currency from importers and banks has slowed. Commercial banks quoted the currency at 3,660/3,670 per dollar, compared with 3,690/3,700 a week earlier.
Traders attributed the softer demand for dollars partly to changing dynamics in energy markets and expect the shilling to trade within a range of 3,650 to 3,670 against the U.S. currency in the coming days.
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The Zambia kwacha is forecast to remain steady, supported by stronger mining production and rising foreign exchange inflows. Africa’s second-largest copper producer saw its currency quoted at 18.45 per dollar on Thursday, compared with 18.20 a week earlier.
Meanwhile, Kenya’s shilling is expected to maintain the stability it has exhibited in recent months. Commercial banks quoted the currency at 129.15/129.25 per dollar, little changed from the previous week’s closing level.
The main exception is Ghana, where traders expect the cedi to weaken further as corporate demand for U.S. dollars increases for imports and dividend repatriation.
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The cedi traded at 11.34 per dollar on Thursday, compared with 11.20 a week earlier. According to market participants, the Bank of Ghana plans to reduce its foreign exchange market interventions in July after supplying an additional $811 million beyond its planned $1.2 billion intervention in June.
Analysts say reduced central bank support, combined with renewed corporate demand for foreign currency, is likely to keep the cedi under pressure in the near term, even as most other major African currencies remain broadly stable.
