Market News

BY  Chris Mfula, Christian Akorlie, Elias Biryabarema, Chijioke Ohuocha and Vincent Mumo Nzilani

LUSAKA, Aug 27 (Reuters) – Zambia’s kwacha is expected to be broadly steady against the dollar in the week ahead, while Ghana’s cedi and Uganda’s shilling may weaken and Nigeria’s naira and Kenya’s shilling could firm modestly, traders said.

ZAMBIA

Zambia’s kwacha is likely to hold steady next week amid political tensions ahead of President Hakainde Hichilema’s swearing-in on Tuesday for a second term following a disputed re-election. On Thursday, commercial banks quoted the currency of Africa’s second-largest copper producer at 19.18 per dollar, compared with 18.98 a week earlier. “Expect consolidation rather than renewed kwacha appreciation,” Access Bank said in a note.

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GHANAGhana’s cedi is seen trading with a weakening bias next week, pressured by a strong buildup in unmet corporate demand for foreign currency on the interbank market.

LSEG data showed the cedi trading at 11.15 to the dollar, compared to 11.05 a week earlier.

“The dollar is likely to gain in the coming week as FX demand driven by the energy sector and coupon and dividend repatriation outstrips supply from the extractives sector,” said Andrews Akoto, head of trading at Absa Bank Ghana.

“The rising value of bids submitted at the last two central bank FX auctions points to a growing backlog of unmet demand,” he added.

Ronald Mensah, a trader at Stanbic Bank Ghana, said he expected oversubscription in the BoG FX auction consistent with prevailing market dynamics as dollar demand continues to outpace supply.

UGANDA

Uganda’s shilling is seen trading in a weakening position in the coming days due to demand from energy importers and commercial banks, traders said.

At 0832 GMT, commercial banks quoted the shilling at 3,740/3,750, compared to last Thursday’s close of 3,715/3,725.

An independent FX trader in the capital Kampala said they were receiving elevated demand for hard currency from fuel importers, while some banks were also exerting demand to beef up their positions.

“That demand wave will continue to be the main dynamic in the short term,” he said.

NIGERIA

Nigeria’s naira could rally next week after its slight appreciation this week, lifted by flows from oil companies and foreign funds buying local securities.

The naira was quoted at 1,344 to the U.S. currency on the official market on Thursday, compared with 1,345 a week earlier.

The currency was changing hands at 1,410 to the dollar in street trading.

“The naira appreciated this week. We may see further appreciation next week if these conditions continue,” one trader said.

“I expect the market to be well supplied as long as interest rates remain high and (the) central bank continues to sell treasuries.”

KENYA

Kenya’s shilling is expected to strengthen slightly against the dollar, driven by diaspora inflows and well-matched supply and demand.

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Commercial banks quoted the shilling at 129.40/50 to the U.S. currency, compared with last Thursday’s close of 129.30/50. Traders said despite month-end demand, the shilling will strengthen in the coming days.

“The shilling is … going to strengthen in the coming week as we go into the new month if the demand eases off,” one trader said.