off-the-wire

WEEKAHEAD-AFRICA-FX- Kenyan, Ghanaian and Zambian currencies expected to weaken

Kitco Media
By Reuters
Published:
Updated:
Reuters
JOHANNESBURG, Feb 16 (Reuters) - Kenya's shilling, Ghana's cedi and Zambia's kwacha are expected to weaken against the dollar in the week to Thursday, while Tanzania's currency is forecast to hold steady, traders said. KENYA Kenya's shilling will remain under pressure in the coming week with dollar supply from tea exporters and remittances failing to keep up with demand from fuel importers. The local unit was trading at 125.50/70 on Thursday, compared to 125.10/30 a week ago. The shilling has steadily lost value against the dollar since mid-2021, according to Refinitiv data, and has fallen 1.75% since the start of this year. "Pressure continues to build. The oil sector is unfilled and the supply side is a little dry," said one trader at a commercial bank. GHANA Ghana's cedi could face pressure in the coming week due to a rise in corporate demands for U.S. dollars despite making marginal gains. Refinitiv data showed the cedi trading at 11.7500 to the dollar on Thursday, down from 11.9000 at last Thursday's close. But it hit a weekly and monthly high of 12.1000 on Wednesday, according to Refinitiv, which Absa Ghana in a note blamed on foreign exchange illiquidity. "Cedi weakened last week on the back of slowdown in dollar supply amid peak in corporate demand. We expect the currency to come under pressure in the coming week if demand pressures persist," said Chris Nettey, a trader at Stanbic Bank.


ZAMBIA The kwacha is likely to continue trading weaker against the dollar next week due to heightened demand for hard currency from importers of fuel, medicines and agricultural inputs amidst sluggish inflows. On Thursday, commercial banks quoted the currency of Africa's second-largest copper producer at 19.6100 per dollar from a close of 19.4600 a week ago. Bank of Zambia governor Denny Kalyalya said on Wednesday that dollar providers had become more characterized on the demand side as they divest from the domestic market. "This is principally due to tighter global financial conditions, negative sentiments associated with the protracted debt restructuring negotiations and uncertainty around the treatment of non-resident holders of government securities," Kalyalya said at a media briefing. TANZANIA Tanzania's shilling is expected to hold steady next week with inflows from normal business operations helping to cushion the demand for the U.S. dollar from energy and manufacturing sectors. Commercial banks quoted the shilling at 2,333/2,343 on Thursday, compared to an average of 2,335/2,345 recorded last week's close.


"The Bank of Tanzania said it will continue to use monetary policy to protect the country against inflationary pressures…urging the private sector to increase exports to help boost dollar inflows," Kristine Van Helsdingen, a trader at AZA Finance, said.


"We expect the shilling to be steady in the week ahead as the central bank remains active in the FX market." (Reporting by Hereward Holland, Christian Akorlie, Chris Mfula and Nuzulack Dausen; Compiled by Bhargav Acharya; Editing by Editing by James Macharia Chege)

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