Zambia’s kwacha to gain, Ghana cedi and Uganda shilling weaken
By Aboki Forex —
LUSAKA – Zambia’s kwacha is set to strengthen against the dollar over the next week, while Ghana’s cedi and Uganda’s shilling are expected to lose ground. Kenya’s shilling should remain broadly stable, traders said on Thursday.
The kwacha traded at 18.69 per dollar on Thursday, up from 19.01 a week ago. Analysts point to strong mining inflows and high copper prices near record highs. The currency also benefits from Zambia’s dedollarisation directive from December and its debt restructuring.
“Elevated copper prices, which remain near record highs, continue to provide strong support. The kwacha is also reaping the benefits of the dedollarisation directive introduced in December, as well as the restructuring of the national debt,” said Diego Barnuevo, an analyst at financial services firm Ebury.
In Ghana, the cedi is expected to keep sliding. It traded at 11.67 to the dollar on Thursday, compared to 11.54 a week earlier. Corporate demand for foreign currency for imports and dividend repatriation is putting pressure on the cedi.
“Sustained corporate FX demand for imports and dividend repatriation is expected to keep the cedi under pressure,” said Andrews Akoto, head of trading at Absa Bank Ghana. Another trader said dollar demand remained elevated and outstripped supply on the interbank market. The trend is likely to continue in the near term.
Uganda’s shilling is weakening ahead of the country’s budget on June 11. Commercial banks quoted the shilling at 3,770/3,780 to the dollar, compared to last Thursday’s close of 3,775/3,785. Higher foreign-currency demand is driving the decline.
“Typically we tend to see strong appetite before the budget reading because there’s a bit of uncertainty about how potential new tax policies might impact the FX market, so banks, importers and others want to be on the safe side,” a trader said.
Kenya’s shilling is forecast to remain stable. Commercial banks quoted it at 129.25/65 per dollar, compared with last Thursday’s close of 129.50/95.