Nigeria's naira was expected to hold steady next week, while the outlook for other African currencies was mixed.
NIGERIA: Nigeria's naira is expected to hold steady next week, with central bank dollar sales expected to help narrow the gap between the official pegged level and the parallel market. But analysts said it would be difficult for the central bank to sustain this action over the longer term. The naira has traded at 197 to the dollar on the interbank market, the official peg introduced by the central bank in February to curb speculation, stem the naira depreciation and conserve foreign exchange reserves.
On the parallel market, the naira was trading at 219 to the dollar, down from 211 a dollar last week, but was expected to stabilise next week, traders said. "The stringent order-based system and restrictions on two-way trade leave the local exchange unit unable to reflect global market turmoil and a sell-off in domestic equities," NKC Africa economics said in its notes on Thursday.
Nigeria pegs its exchange rate at 197 to the dollar and abolished twice-weekly auction of forex in February in the wake of falling oil prices, leading to a rapid depreciation of the local currency on the parallel market.
GHANA: Ghana's cedi may extend a rally next week, supported by central bank dollar sales. The local unit, which weakened by about 25 percent after a strong rally in mid-July, recouped some this week. It traded at 3.7000 at 1022 GMT on Thursday, compared to 4.1100 a week ago. Joseph Biggles Amponsah, analyst at Accra-based Dortis Research, said central bank dollar sales expected in the coming week would help the currency make further gains.
KENYA: Kenya's shilling is expected to remain under pressure next week, hobbled by dollar strength and the retreat by foreign investors from emerging markets across the globe. At 1142 GMT, the shilling was quoted at 105.00/20 to the dollar, from 103.70/80 to the dollar a week ago. It is closing in on an all-time low around 107.
"Over the last couple of months on average, the shilling has lost about a shilling every week ... and the trend looks set to continue," said a trader at one Nairobi-based commercial bank. "There is a lot of liquidity in the market and also the dollar has been strengthening against major emerging market currencies," he added. Traders say expectations of further central bank intervention with dollar sales was providing some support.
TANZANIA: The Tanzanian shilling is expected to remain steady against the dollar, helped by a slowdown in demand ahead of elections next month. Commercial banks quoted the shilling at 2,145/2,155 to the dollar on Thursday, unchanged from a week ago.
"There is a slowdown in business activity partly due to the upcoming elections on October 25. The shilling will likely remain at same levels next week," said Theopistar Mnale, a dealer at TIB Development Bank.
UGANDA: The Ugandan shilling is forecast to trade in a recent range during the next one week, amidst a lack of local currency liquidity and a slide in demand for US dollars. At 1056 GMT commercial banks quoted the shilling at 3,665/3,675, weaker than last Thursday's close of 3,600/3,610.
"Liquidity is scarce on one hand and demand (for dollars) has also tailed off," said Faisal Bukenya, head of market making at Barclays Bank. "I see the shilling playing in the 3,650-3,675 range." Traders say importers are not seeking dollars as they consider the shilling underpriced at current levels. The shilling is 24.6 percent weaker against the greenback so far this year.
ZAMBIA: The Zambian kwacha is expected to remain under pressure against the dollar next week amid worries about a shortage of electricity and the low price of copper, the country's major export. At 1017 GMT on Thursday, commercial banks quoted the currency of Africa's No 2 copper producer at 9.8100 per dollar, weaker than 8.4850 a week ago.
"There are worries about electricity problems as well as falling copper prices and the failure by the government to state how it intends to halt the slide has created panic," analyst Maambo Hamaundu said. Hamaundu said the kwacha was expected to register further losses next week unless the government came out with a strong message on policy measures to stabilise the currency.
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