Currency Forecast: Pressure on Kenyan, Nigerian, and Zambian Currencies

The currencies of Kenya, Nigeria, and Zambia are forecasted to weaken, while Ghana’s cedi remains stable and Uganda’s shilling might strengthen, according to traders. Key factors contributing to these trends include dividend payments, currency demand, and central bank actions.

The currencies of Kenya, Nigeria, and Zambia are projected to experience pressure in the upcoming week, according to traders. In contrast, Ghana’s currency is expected to remain stable, while Uganda’s currency might strengthen against the United States dollar.

In Kenya, the shilling is anticipated to weaken as banks process last year’s dividend payments. As of Thursday, commercial banks quoted the shilling at 129.30/129.50 per U.S. dollar, reflecting a decline from the previously reported rate of 129.00/129.40. One trader stated, “As banks announce their results, offshore people will be looking to buy dollars to repatriate their dividends,” indicating a potential further weakening without central bank intervention.

In Nigeria, the naira is expected to depreciate against both official and parallel markets due to heightened foreign currency demand that exceeds central bank supplies. On Thursday, the naira was quoted at approximately 1,550 to the dollar, down from 1,520 naira the previous week, with street trading reaching around 1,570 naira. A trader remarked, “Rising dollar demand has upset the stable rates we’ve seen in the last couple of weeks,” predicting continued declines unless supply improves.

Ghana’s cedi appears stable, bolstered by central bank support, remaining at 15.45 to the dollar on Thursday, unchanged from the prior week. Chris Nettey, head of trading at Stanbic Bank Ghana, noted that “Cedi has maintained its stability this week amid matched demand and supply… We expect this trend to continue into next week,” reinforcing a positive outlook for the currency.

Uganda’s shilling is forecasted to strengthen as businesses prepare for mid-month tax payments. It was quoted at 3,662/3,672 per dollar, showing slight changes from last week. One trader indicated a decrease in demand for dollars, stating, “The local unit may draw a bit of strength from that,” projecting trading around 3,630-3,660.

Zambia’s kwacha is anticipated to remain under pressure due to increased demand for foreign currency and limited supply, with its value quoted at 28.58 on Thursday, down from 28.70 previously. Access Bank commented that “Foreign currency conversions may not be sufficient to trigger gains but could merely slow depreciation,” pointing to rising imports as a contributing factor to currency depreciation.

In summary, the currencies of Kenya, Nigeria, and Zambia are expected to experience downward pressure, driven by factors such as dividend repatriation, rising dollar demand, and limited supply. Conversely, Ghana’s cedi and Uganda’s shilling hold more stable prospects due to central bank interventions and fiscal preparations, respectively. The outlook indicates a mixed performance across the African currencies in the coming week.

Original Source: www.tradingview.com