African currencies week ahead: African currencies to wilt on China market rout, dollar buying

10 Jan, 2016

African currencies are expected to come under pressure next week as emerging markets weaken due to China's economic woes, especially Zambia, which exports copper to the world's second-largest economy. Other African currencies are seen weaker as dollar demand rises as trade picks up following the year-end holidays.
At 1132 GMT, commercial banks quoted the currency of Africa second-largest copper producer at 10.9900 per dollar from 10.8200 a week ago. "We expect the kwacha to be pressured next week due to spillover effects from China, and renewed weakness in industrial metals," NKC African Economics economist Irmgard Erasmus said.
"We will see demand kick in. This week has been quiet," a trader at one commercial bank said. "As it is, we haven't got a number of calls from some of the corporates that usually buy the dollar, so we expect proper corporate activity to pick up."
"Supplies are thin but on the demand counter we're expecting that appetite particularly from importers will start to gradually pick up," said a trader at a leading commercial bank.
"The shilling will likely continue to depreciate marginally next week on the back of demand for dollars that is picking up from oil and manufacturing companies. We expect the shilling to touch 2,200 levels," said Sameer Remtulla, a dealer at Commercial Bank of Africa Tanzania.
"Amidst expectations of high demand for dollars during and immediately after the festive season, the cedi could come under some pressure in the coming week," Joseph Biggles Amponsah, analyst at the Accra-based Dortis Research said.

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