African currencies week ahead: liquidity boost for Kenyan shilling, Ghana cedi struggles

The Kenyan shilling is expected to receive some support from tight liquidity, while Ghana's cedi is expected to remain under pressure as dollar demand rises amid market uncertainty over the currency's outlook.
KENYA The shilling is expected to receive some support from tight liquidity, which makes it expensive to hold dollars. Commercial banks quoted the shilling at 101.10/20 to the dollar, compared with last Thursday's close of 102.20/30.
"The factors will remain the same. Shilling liquidity is getting tighter. Interest rates are getting higher, as long as interest rates remain high, it won't be worth holding dollars," a senior trader at one commercial bank said. The weighted average interbank lending rate rose to 21.2682 percent on Wednesday from 20.4375 percent a day earlier, having hit a high of 23 percent.
TANZANIA The shilling is expected to be stable against the dollar and could strengthen slightly, helped by a slowdown in demand for the US currency amid steady hard currency inflows. Commercial banks quoted the shilling at 2,100/2,110 to the dollar on Thursday, stronger than 2,110/2,120 a week ago.
"The outlook so far is that the shilling will likely remain stable next week or it could appreciate slightly due to inflows from cotton exports and tourism, amid a slowdown in demand for dollars. A liquidity tightness on the shilling is also supporting the local currency," said Mohamed Laseko, a dealer at CRDB Bank.
UGANDA The shilling is expected to be under pressure from a rebound in demand for the greenback from corporate firms in the energy, telecoms and manufacturing sectors. At 0923 GMT commercial banks quoted the shilling, which has lost 21 percent of its value so far this year, at 3,510/3,520, weaker than last Thursday's close of 3,410/3,420.
"I see corporate demand pressure is upward ... this appetite (for dollars) should keep the shilling on a bearish bias," said Faisal Bukenya, head of market making at Barclays Bank.
NIGERIA The naira is seen stable on both the interbank and parallel markets after the central bank introduced measures to curb speculation and reduce pressure on its forex reserves. The central bank has banned the acceptance of foreign currency cash deposits by commercial banks to stem illicit financial flows. The bank has also asked commercial lenders to deposit naira equivalent of their dollar requirements with it 48 hours in advance to stem demand.
The local currency firmed to 218 to the dollar on the parallel market on Thursday from 241 a week ago, and closed at 197 on the official market unchanged from last Thursday. "We expect to see a stable naira in the days ahead with the various measures being adopted by the central bank to stem speculations in the market," one dealer said.
GHANA The cedi is expected to remain under pressure as risk-averse businesses and individuals crave for dollars amid market uncertainty over the currency's outlook.
The local currency rebounded strongly in July after slumping 25 percent in the first half of the year on central bank dollar sales but has been weakened since on rising greenbacks demand. The cedi traded in the 3.7500-3.8800 band at 1045 GMT on Thursday, from 3.7000-3.730000 a week ago, down 20 percent since January, according to Reuters data.
"We see the uncertainty regarding whether or not the cedi will relapse to the depths that we saw in the first half of this year, causing traders and businesses to buy and hold as much as their capacities will allow," analyst Kwabena Owusu of Dortis Research said.
ZAMBIA The kwacha will likely remain on the back foot on increased demand for hard currency by importers seeking to cash in on Zambia's power deficit by selling power-generating sets.
At 0929 GMT on Thursday, commercial banks quoted the currency of Africa's No 2 copper producer at 7.8400 per dollar, weaker than 7.6700 at which it closed a week ago. "Quite possibly there has been an increase in the importation of power-generating items heightening the demand for foreign exchange," one commercial bank trader said. The kwacha could trade between 7.7000 to 7.9000 per dollar. Zambian power utility Zesco Ltd is limiting the power it supplies to customers, mining companies, after water levels at its hydro-electric plants fell due to drought.