Zambia's kwacha is expected to maintain its downward trend next week although another under-pressure African currency, Ghana's cedi, may find support from traders expecting inflows of dollars from cocoa and Eurobond loans.
Cocobod, the cocoa industry regulator, is due to sign a $1.8 billion loan in Paris for the 2015/16 crop purchases. Ghana also plans to issue a fourth Eurobond of up to $1.5 billion in late September for debt restructuring and budget financing. "We expect this stability to continue this week and into next week on the expected inflows, leading to the much anticipated cedi gains," Dortis Research analyst Joseph Biggles Amponsah said.
"As we go more towards the end of the month, the demand will pick up, and I think the 106 level has to be breached. I feel the trend remains for a weaker shilling, though central bank intervention will slow the process," a senior trader at one commercial bank said.
"Appetite from importers and other corporate clients remains substantially low. I don't see that trend changing," said Faisal Bukenya, head of market making at Barclays Bank.
The shilling was likely to oscillate between 3,645-3,680 over the next week but with a stronger bias. Traders say demand for dollars from importers has been low because some are unwilling to buy above 3,650 to the greenback.
"The shilling is expected to gain ground against the dollar next week as we approach the end of the month and the end of the third quarter," said Theopistar Mnale, a dealer at TIB Development Bank.