Zambia's kwacha is set to extend its losses against the dollar next week, weighed down by weak copper prices and general risk aversion following Greece's debt default. The Nigerian naira is also likely to remain under pressure on the thriving black market but Ghana's cedi is seen firming after a heavy sell-off that pushed it to record lows.
Standard & Poor's recent downgrading of Zambia's long-term credit rating to B from B+ and news that Africa's second largest copper producer plans to cut power supplies to mines are keeping the kwacha under pressure, another trader said.
The local currency hit a new record low of 235/dollar in informal trade on Thursday, weaker from 230 last week. On the sanctioned market it was quoted at 199.45 compared with 196.95 a week ago.
Some people were hoarding dollars in anticipation of further naira weakness, the president of Nigeria's Bureau de Change association Aminu Gwadabe told Reuters. "We see the naira cross 240 next week if the central bank fails to do something about it," Gwadabe said. The Central Bank of Nigeria has said the parallel market is too shallow to force it to devalue the currency.
"We expect the cedi gains recorded so far to signal pressure on traders and firms that receive offshore dollars to offload their inflows to the market," said Joseph Biggles Amponsah of the Accra-based Dortis Research. Dollar/cedi could touch 3.3500 by next week if the central bank maintains its support, Amponsah added.