KENYA Kenya's shilling is expected to weaken slightly in the coming week, but not as sharply as in previous months, as the revival of the long-dormant interbank market gathers momentum, and begins to absorb persistent importer demand. At 1055 GMT commercial banks quoted the shilling at 132.20/40 compared to last Thursday's close of 131.20/40. Refinitiv data shows the shilling has lost 6.7% of its value against the dollar this year. On Thursday central bank governor Patrick Njoroge said the return of interbank trade over the past two weeks had smoothed out volatility in the shilling's exchange rate. "We are beginning to see a bit of convergence, we're beginning to see the spreads starting to narrow," said a trader at one commercial bank. On Wednesday, the central bank raised its benchmark lending rate to 9.50% from 8.75% previously and said there was room for further tightening of monetary policy in anticipation of higher inflation. "The decision by central bank – it was way behind the curve - but was largely unexpected by the market players, and that may give the shilling some shine going forward," a trader at another bank said. "A higher interest rate is a return on a currency so it'll make it more attractive to hold it, and it also reflects to the market that inflation is being addressed."
NIGERIA Nigeria's naira could weaken on the parallel market as unsuccessful bidders at a central bank foreign exchange auction on Friday channel their demand to informal sources, traders said. The naira traded at 748 against the dollar on the parallel market on Thursday, from 746 naira last week. It traded within a range of 460 to 462 on the official market . "You might put a bid (at the auction) and win between 10% to 40% of the bid, so customers keep bidding," one trader said, adding that the central bank collates the bids and determines the volume of foreign currency to sell.
GHANA Ghana's cedi is expected to strengthen due to a drop in demand for dollars by oil importers and a new central bank lending rate hike. Refinitiv Eikon data showed the cedi trading at 11.600 to the dollar on Thursday, compared to 12.000 at last Thursday's close. "The cedi has gained steadily against the dollar in recent sessions driven by the surprise policy rate hike and dwindling FX demand as market participants anticipate an IMF deal," said Andrews Akoto, head of trading at Absa Bank Ghana. Ghana's central bank raised its main interest rate again this week despite two consecutive months of slowing inflation. Authorities are meanwhile in talks with bilateral creditors for financial assurances that are a condition for accessing a $3 billion International Monetary Fund (IMF) loan. Absa Ghana said in a note that a policy to buy oil products with gold rather than dollars also slowed demand for the greenback.
UGANDA The Ugandan shilling is forecast to weaken, undermined by demand from commercial banks and some foreign-owned firms preparing to pay last year's dividends.
Commercial banks quoted the shilling at 3,785/3,795 per dollar, compared with last Thursday's close of 3,765/3,775.
"We've been seeing dividend-driven demand in the market in last couple of weeks, I would anticipate this dynamic will sustain in the short term," said a trader from one commercial bank, adding banks were also displaying strong appetite for dollars.
ZAMBIA The kwacha may lose more ground against the dollar in the coming week owing to lower hard currency supply and excess demand from large corporations and importers.
On Thursday, commercial banks quoted the currency of
Africa's second-largest copper producer at 21.6200 per dollar,
down from 21.1500 at the close of business a week ago.
"Near term, the local unit is expected to remain
bearish on the back of sustained greenback appetite," Access
Bank said in a note.
Finance Minister Situmbeko Musokotwane said on March 16 that
delays in the country's debt restructuring process were putting
pressure on the local currency as foreign investors were scared
investments in Zambian bonds would be subject to restructuring.
World Bank President David Malpass said last week he was
concerned about the debt restructuring stalemate in Zambia.
(Reporting by Christian Akorlie, Hereward Holland, Inveen
Cooper, Chris Mfula and Elias Biryabarema; Compiled by George
Obulutsa)
