A bond auction in Ghana next week that is open to foreign investors is likely to buoy the Ghanaian cedi, while the Ugandan shilling is seen regaining stability after a three-month bout of weakness. Ghana's cedi could rally next week against the dollar thanks to a bond auction slated for October 25.
The Bank of Ghana is issuing the 500 million cedi ($264.6 million) 3-year government bond, open to offshore investors, to restructure the government's short-term debts. The bank said this week it would implement "rigorously" existing laws that bar pricing products and services in dollars. "We expect the current 1.8825-1.8870 range to give way early next week and quickly expose the $1.8700 level," he added.
UGANDA: The Ugandan shilling is forecast to hold steady against the dollar in the coming week after being on the back foot since the end of July, with marginal gains likely on the back of an uptick in debt yields. After months of relentless decline, pressured by an ongoing monetary policy easing cycle, rates on Uganda's debt instruments edged up at an auction this week, restoring the confidence of offshore investors in the local currency.
The weighted average yield on the benchmark 91-day paper rose slightly to 9.69 percent from 9.67 percent at the previous auction on October 4, while rates on the 182-day and 364-day tenors rose by larger margins. Commercial banks quoted the currency of Africa's largest coffee exporter at 2,575/2,585, stronger than last Thursday's close of 2,590/2,600. A series of cuts to the central bank's key lending rate put the shilling under pressure since late July, culminating in a sharp depreciation last week that prompted the Bank of Uganda to intervene four times.
KENYA: The Kenyan shilling is seen easing in the coming days, weighed down by importers, especially from the oil sector, stocking up on dollars to meet their month-end demand. Commercial banks quoted the shilling at 85.05/25 to the dollar, barely moved from last Thursday's close of 85.10/30. "If end-month demand comes in the shilling may touch 85.50 next week," said John Muli, a trader at African Banking Corporation.
But traders said rising interest rates on the money market might offer some reprieve for the shilling as commercial banks shift their portfolios into shillings to take advantage of the higher rates.
TANZANIA: The Tanzanian shilling is expected to strengthen against the dollar over the next week, helped by weak demand from importers, but interbank activity could put the local currency under pressure. Commercial banks in Dar es Salaam quoted the shilling at 1,580/1,585 to the dollar on Thursday, weaker than 1,572/1,579 a week ago.
Market participants said the shilling will probably trade in the 1,570-1,580 range next week, underpinned by companies selling dollars ahead of salary and tax obligations that are due at the end of the month. The Bank of Tanzania said on its website it traded $13.95 million on the interbank forex market in the past week.
ZAMBIA: The Zambian kwacha is expected to maintain a bearish tone next week in the absence of any significant dollar inflows after it broke all anticipated resistance barriers, prompting central bank intervention this week. Commercial banks quoted the kwacha at 5,200 down 1.3 percent from 5,130 per dollar a week ago. "The local currency is expected to trade in the ranges of K5,200 and K5,300," one commercial bank trader said.
NIGERIA: The naira is seen stable against the dollar next week as expected inflows from foreign investors buying treasury bills balance surging greenback demand by gasoline importers. The naira was trading at 157.48 to the dollar on the interbank market firmer than the 157.55 to the dollar the previous day. The currency fell to its weakest in three weeks on the interbank market on Monday as dollar demand by importers outpaced the supply of hard currency.
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