LAGOS, DECEMBER 15, 2016 – Nigeria’s naira and some other African currencies are expected to stay broadly stable over the coming week as the tempo of business slows ahead of Christmas festivities but Ghana’s cedi could strengthen, helped by flows from commodity sles.
The naira has traded steady this week at 485 to the dollar on the parallel market as demand for the greenback waned.
“There should be little pressure in the currency market in the coming days because many businesses are already winding down their operations,” a currency changer told Reuters.
Nigerians living abroad who will be visiting home for the holidays are also expected to bring in hard currency inflows and offer extra support to the naira.
Ghana’s cedi is seen being underpinned by foreign exchange supplies from cocoa sales.
The currency stabilised this week after a streak of losses ahead of a presidential election on Dec.7, won by opposition leader Nana Akufo-Addo.
Analyst Joseph Biggles Amponsah of the Accra-based Dortis Research said the cedi would “extend its gains in the coming week to trade below 4.1000 and towards the 4.0000 levels”.
Tanzania’s shilling is seen appreciating slightly due to a slowdown in demand for hard currency from importers while players are expecting some inflows from the agricultural sector and big firms converting some of their hard currency holdings.
Commercial banks quoted the shilling at 2,178/2,183 to the dollar on Thursday, barely moved from 2,174/2,184 a week ago.
“There is a big demand for shillings at the moment as corporates are selling dollars to meet payment obligations in local currency,” said a dealer at a commercial bank.
The Kenyan shilling could lose ground due to importer demand and spillover negative sentiment after the U.S. Federal Reserve raised rates, traders said.
At 1145 GMT, commercial banks quoted the shilling at 102.00/102.10 to the dollar, little changed from last Thursday’s close of 101.95/102.15.
“We are likely to see emerging market currencies, Kenya being one of them trading lower (weaker) against the dollar,” said a trader from a commercial bank.
UGANDA The Uganda shilling is forecast to trade with a firming bias, helped by a large mop-up of excess local currency liquidity by the central bank.
At 1214 GMT commercial banks quoted the shilling at 3,600/3,610, stable from last Thursday’s close.
Bank of Uganda, the central bank, removed a total of 831 billion shillings ($230.51 million) from the interbank market via a 7-day repo.
“I see the local unit playing in a stable range but probably inclined toward the strengthening side,” said a trader from a leading commercial bank who added the mop-up would trim appetite for the greenback among banks.
The kwacha will likely trade in a stable position on the back of ebbing demand for hard currency as most firms start to close or cutback business ahead of the Christmas and year-end festivities.
At 0948 GMT, commercial banks quoted the kwacha at 9.8900 per dollar from a close of 9.8400 a week ago, according to Thomson Reuters data.
“Activity in the market has slowed. The kwacha has traded in the 9.850/9.900 range over the past few weeks and should remain in the current range as we go into 2017,” the Zambian branch of South Africa’s First National Bank (FNB) said in a note.