Africa FX: Uganda’s Currency Seen Gaining While Ghana’s Could Drop

Uganda’s currency is seen strengthening against the dollar in the next week to Thursday, while Ghana’s could weaken and Kenya’s and Nigeria’s are expected to be broadly unchanged, traders said.

UGANDA

Uganda’s shilling UGX= is seen trading with a firming bias in the coming week, helped by hard-currency inflows from charities and commodity exporters.

Commercial banks quoted the shilling at 3,660/3,670 to the dollar, compared to last Thursday’s close of 3,670/3,680.

“We normally receive an increase in inflows toward end of month so I anticipate that dynamic to play out in the coming days,” one trader said.

The shilling will likely trade in a range of 3,640-3,670 to the U.S. currency, he said.

Charities convert some of their donations from foreign currency into shillings to meet operational expenses like salaries.

GHANA

Ghana’s cedi GHS= could weaken further on seasonal demand for dollars, as companies in the commerce and manufacturing sectors stock up ahead of the festive period.

LSEG data showed the cedi trading at 16.10 to the dollar on Thursday, compared to 15.99 at last Thursday’s close.

“FX illiquidity has plagued the local unit in recent sessions and has seen the cedi depreciate considerably as a result. Demand for hard currency has come from both local and offshore participants,” said Sedem Dornoo, senior trader at Absa Bank Ghana.

“Locally, demand seems to be driven primarily by the manufacturing sector. In the coming week, I expect to see continued pressure on the cedi as demand for the greenback remains strong,” he added.

One trader said the central bank’s forward auctions had not fully dealt with foreign-currency demand on the interbank market, weighing on the cedi.

NIGERIA

Nigeria’s naira is seen relatively stable, buttressed by central bank interventions to meet rising foreign-currency demand from importers stocking up for the festive season.

The naira NGN=D1 was quoted at 1,676 to the dollar on the official market on Thursday, LSEG data showed, compared with a closing rate of around 1,663 naira a week earlier.

The currency was changing hands much weaker in street trading NGNP= at 1,728 naira to the dollar.

“I don’t think the central bank will allow it run too far from where we are,” one trader said.

KENYA

Kenya’s shilling KES= is expected to remain unmoved as month-end payroll and tax commitments offer support.

Commercial banks quoted the shilling at 128.50/129.50 per U.S. dollar, the same as last Thursday’s closing rate.

Source:norvanreports.com