Ghana's cedi could weaken next week on increased dollar demand, while other currencies are likely to be stable.
GHANA: The cedi hit new lows this week and could remain under pressure as dollar demand continued to outstrip supply. The USD/GHS broke the 4.0 resistance on Tuesday, and traded at 4.0100-4,0300 at 1030 GMT from 3.9350-3.9750 last Thursday. "Not much inflows are anticipated within the remaining parts of this week and next week and for this reason the pair will continue to trade in the same direction, resulting in further losses for the GHS," Kwabena Yeboah of the Accra-based Dortis Research said. The central bank governor has blamed the continued weakening of the cedi partly on speculative foreign exchange activities.
KENYA: The shilling is likely to get support from a liquidity squeeze in the money markets partly caused by the central bank's tightening stance. The shilling was steady at 96.85/95 on Thursday, down from 96.15/25 at the close a week ago. Traders said caution set in after overnight lending rates on the interbank market rose to 12 percent on Wednesday.
"The rising overnight rates and tightening liquidity will offer support," said a trader at a commercial bank. The central bank has been aggressively mopping up liquidity from the money markets in recent weeks, making it slightly more expensive for players to bet against the shilling.
NIGERIA: The naira is seen unchanged at the same level it has been trading since the central bank imposed a restriction on the forex market since February. The local currency was trading at 198.5 to the dollar on Thursday at 1120 GMT, same level last week as central bank failed to relax its restriction on the forex market, rendering the interbank forex market inactive. At the Monetary Policy Committee meeting on Tuesday, the central bank maintained the prevailing tight control in forex market, which has restricted access to dollar by importers.
TANZANIA: The shilling is expected to be stable and could strengthen slightly due to expected sales of the US currency by corporates seeking to meet their local monthly payments. Commercial banks quoted the shilling at 2,030/2,040 to the dollar, weaker than 2,010/2,020 a week ago. Fred Siwale, a dealer at CRDB Bank, said the local currency could gain against the US dollar "thanks to end-of-month inflows from corporates to meet salary and tax obligations."
UGANDA: The shilling is projected to ease on dollar demand from the energy and manufacturing sectors amid healthy levels of local currency liquidity. At 1020 GMT commercial banks quoted the shilling at 2,995/3,005, weaker than last Thursday's close of 2,990/3,000. "We have signs of an uptick in energy and manufacturing demand and there's also fairly high liquidity in the market," said Ahmed Kalule, trader at Bank of Africa. "These two factors will likely keep some pressure on the shilling."
ZAMBIA: The kwacha is expected to weaken slightly on reduced dollar inflows after a government bond auction worth a total of 1 billion kwachas ($142 million) on Friday, traders said. At 0855 GMT, commercial banks quoted the currency of Africa's second-largest copper producer at 7.1000 per dollar, up from 7.2100 a week ago, according to Thomson Reuters data. "Speculative buying of dollars and profit-taking will trigger kwacha weakness. Nonetheless, the increase in the supply of dollars experienced this week will most likely limit the kwacha weakness," a commercial bank trader said.
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