Uganda Shilling Heads for More Record Lows as Naira Holds Steady

Kampala, Oct 8: Traders expect Uganda's shilling to set more record lows against the dollar in the week to Thursday, while Ghana's cedi remains under pressure. Nigeria's naira, Kenya's shilling and Zambia's kwacha are seen broadly stable.

Uganda's shilling is taking further losses from strong foreign-currency demand by merchandise importers, energy companies and the telecoms sector. Commercial banks quoted the shilling at 4,090/4,100 to the dollar, compared with last Thursday's close of 3,960/3,970.

The currency has recorded repeated all-time lows this month and is down more than 11% against the dollar so far this year.

Uganda Faces Holiday Dollar Demand

Stephen Kaboyo, managing director of financial services firm Alpha Capital Partners, said: "The shilling is expected to face renewed pressure as local businesses aggressively source and stockpile dollars ahead of the Q4 holiday peak. Other lingering factors such as the high energy prices will add to the weakening momentum."

Uganda's central bank has said it does not plan to intervene directly in the currency market to defend a particular shilling level. It has said it has tools to manage excessive volatility.

Ghana Cedi Under Pressure

Ghana's cedi could slip further as energy and manufacturing businesses seek dollars. LSEG data showed the cedi trading at 11.7650 to the dollar, compared with 11.7100 a week ago.

"The cedi is likely to remain under pressure against the dollar in the coming week," a trader said, pointing to unmet demand at a spot foreign-currency sale by artisanal gold marketing agency GoldBod.

Naira, Kenyan Shilling and Kwacha

Nigeria's naira is expected to be steady, supported by central bank dollar sales meeting demand ahead of the holiday season. The naira was quoted at 1,331 to the U.S. currency on the official market on Thursday, compared with 1,333 a week earlier. The currency was changing hands at 1,370 to the dollar in street trading.

"I don't expect any material deviation from the current range. I expect stability ... into next week," a trader said.

Kenya's shilling is forecast to remain broadly unchanged over the coming days. Commercial banks quoted the shilling at 129.80/130.00 per dollar, compared with last Thursday's close of 129.45/65. Kenya's central bank governor said on Thursday that diversified foreign-exchange inflows and strong international reserves had helped the shilling weather elevated global uncertainty. A day earlier, the bank maintained its main lending rate for the fourth monetary policy meeting in a row.

Zambia's kwacha is likely to stabilise after falling this week, helped by hard-currency sales by companies preparing to pay upcoming taxes. On Thursday, commercial banks were selling one dollar at 20.23 kwacha, compared with 19.95 a week ago.

What It Means for Nigerian Businesses

For Nigeria, the outlook points to a relatively stable naira in the short term if central bank dollar sales continue to meet seasonal demand. Importers planning holiday stock should watch both the official rate of 1,331 and the street rate of 1,370.