African Currencies Plunge: Nigeria, Kenya, Uganda Hit
Traders predict that the currencies of Nigeria (the naira), Kenya, and Uganda (the shillings) will likely depreciate in the upcoming week until Thursday. However, they anticipate that the currencies of Ghana (the cedi) and Zambia (the kwacha) might remain stable during this period.
KENYA
The depreciation of Kenya’s currency, the shilling, is anticipated due to a rise in the need for dollars across various industries such as manufacturing.
Commercial banks offered the shilling at a rate of 157.00/158.00 per U.S. dollar, marking a difference from the previous Thursday’s closing rate of 156.50/157.50.
“It (dollar demand) is just across industry; manufacturing and so on. It (the shilling) continues to weaken,” one trader said.
Merchants mentioned that the central bank had recently authorized banks to increase bid-ask spreads to 1 shilling from the earlier spread of 20 cents late last month.
UGANDA
The Ugandan currency, the shilling, is anticipated to depreciate due to increased demand for the dollar from both the energy industry and importers of various goods.
Commercial banks offered an exchange rate of 3,800/3,810 shillings per dollar, marking a change from the previous Thursday’s closing rate of 3,775/3,785.
“Fuel importers are exerting significant (dollar) demand, I would anticipate that will be a key dynamic in the coming days,” one trader said.
He predicted that the shilling would probably fluctuate between 3,800 and 3,840 in the upcoming week.
NIGERIA
The Nigerian naira is expected to decrease in value on the official market, approaching rates seen on the unofficial market. This is due to a shortage of dollars and the resurgence of business activities following the Christmas break.
The naira was quoted at 899 to the dollar on the official market on Thursday, versus the parallel market rate of 1,230 naira.
“Unless there is renewed confidence or (forex) buyers start resisting, I don’t see anything stopping the naira from trading lower,” one trader said.
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GHANA
The Ghanaian cedi is predicted to remain mostly steady due to the lack of increased trading activity in the interbank market.
Information from LSEG indicated that the cedi remained unchanged at 11.9000 against the dollar on Thursday, mirroring the closing rate from the previous Thursday.
“The cedi has been largely stable against the dollar to start the year, with the market quiet as many participants have not yet returned from their holiday breaks,” said Sedem Dornoo, a senior trader at Absa Bank Ghana.
“We expect this narrative to persist.”
ZAMBIA
The Zambian kwacha is expected to remain stable, supported by interventions from the central bank following a prolonged period of decline.
On Thursday the kwacha was trading at 25.75 per dollar, weaker than 25.20 per dollar on Dec. 21.
Zambia’s central bank sold $74 million in Wednesday’s trading session to buttress the local currency, Access Bank said.
African Currencies Plunge: Nigeria, Kenya, Uganda Hit
