Naira and Ugandan shilling face pressure, Kenya, Ghana, Zambia steady

Traders on October 22 said the naira and Ugandan shilling are expected to weaken against the dollar in the week to next Thursday, while Kenya, Ghana and Zambia’s currencies are likely to remain stable.

Naira eyes weaker path

Nigeria’s naira could slip as importers buy hard currency ahead of the holiday season and investors take profits on securities. The naira was quoted at 1,339 on the official market on Thursday, compared with 1,331 a week earlier. The currency was changing hands at 1,370 to the dollar in street trading.

A trader said the naira risked sliding further if it breached the 1,340 level and that central bank intervention would be needed next week to ease pressure on the currency.

Uganda shilling extends losses

Uganda’s shilling is seen extending its losses in the coming days, pressured by strong dollar demand from energy and merchandise importers, though a central bank dollar sale could help slow the pace of depreciation.

Commercial banks quoted the shilling at 4,250/4,260 to the dollar, compared to last Thursday’s close of 4,045/4,055. A trader said the central bank’s dollar sale on Thursday would help absorb some demand but was unlikely to reverse the shilling’s losing trend.

Kenya, Ghana and Zambia hold steady

Kenya’s shilling will likely hold steady against the dollar. Commercial banks quoted the shilling at 129.80/130.00 per dollar, the same as last Thursday’s close. “We have seen some dollar strength in recent days, with the shilling touching almost 130,” a trader said, adding that month-end dollar demand was likely to keep the currency trading in the 128-130 to the dollar range.

Ghana’s cedi is expected to remain near current levels, supported by improved dollar supply and growing liquidity on the interbank market. LSEG data showed the currency trading at 11.54 to the dollar, from 11.63 a week ago. “Decent mining-related FX inflows should continue to offer the local unit favourable tailwinds against the dollar in the coming week, as energy and commerce sector FX demand moderates,” said Andrews Akoto, head of trading at Absa Bank Ghana.

Ronald Mensah, a trader at Stanbic Bank Ghana, said scheduled dollar sales by artisanal gold marketing agency GoldBod should provide support for the cedi in the near term.

Zambia’s kwacha is also seen range-bound as corporates continue selling dollars for month-end payments. On Thursday, commercial banks were selling the dollar at 20.37 from 20.18 a week ago. “The pressure is still there but companies need to make huge payments in the local currency,” a financial analyst said.

For Nigerian businesses and consumers, the pressure point is the dollar cost of imports ahead of the holiday season. The naira’s official and street rates will be watched closely, especially around the 1,340 level.