Kenya and Uganda currencies face fresh pressure as Ghana's cedi extends gains

The Kenyan shilling and Ugandan shilling are expected to remain under pressure in the week to Thursday, traders said on Oct 15, while Ghana's cedi could extend gains and Zambia's kwacha and Nigeria's naira may be little changed.

In Nairobi, traders said Kenya's shilling is seen losing ground after a long period of stability because of increased dollar demand from oil marketers and general importers. Inflows from charities could limit the losses. Commercial banks quoted the shilling at 129.75/95 per dollar on Thursday, unchanged from a week earlier.

Uganda shilling faces headwinds

Uganda's shilling could edge lower despite this week's emergency interest rate hike by the central bank. The 2.25-percentage-point hike provided an immediate lift to the shilling on Wednesday, but traders said weaker export receipts and high energy prices mean the currency will face headwinds again soon.

'I would think the shilling will continue weakening driven by the same fundamentals, but possibly the depreciation will be at a much slower pace,' a trader said. Commercial banks quoted the shilling at 3,990/4,000 to the dollar, compared with last Thursday's close of 4,080/4,090.

Ghana cedi and Zambia kwacha

Ghana's cedi is expected to add to this week's gains, helped by strong foreign-exchange inflows from the mining sector and improving interbank market liquidity. LSEG data showed the cedi trading at 11.60 from 11.73 a week ago.

'The cedi is likely to extend its rally against the dollar in the coming week, as strong mining-sector FX inflows outweigh demand from local corporate accounts,' said Andrews Akoto, head of trading at Absa Bank Ghana.

Zambia's kwacha is expected to hold steady, supported by hard-currency sales from companies raising local funds to meet month-end obligations. Commercial banks were selling one dollar at 20.18 kwacha on Thursday, compared with 20.23 a week earlier.

'Despite persistent pressure arising from (foreign-currency) demand from importers, corporates will also be selling dollars to pay salaries and other month-end dues,' a financial analyst said.

Nigeria naira seen broadly stable

Nigeria's naira may be broadly unchanged, supported by central bank dollar sales and foreign inflows. The unit was quoted at 1,329 to the dollar on the official market on Thursday, little changed from 1,331 a week ago. The currency was changing hands at around 1,375 to the dollar in street trading.

'We expect to see a broadly stable naira in the coming week, largely due to the Central Bank of Nigeria dollar sales,' a trader said.

For Nigerian businesses, the outlook points to a naira that is still supported by CBN dollar sales, even as regional currencies face different pressures. The official rate remains near 1,329 to the dollar, while street trading sits around 1,375.