AFRICA-FX: Ghana’s currency may decline, but Uganda’s is expected to rise

According to traders, Ghana’s currency may depreciate, Kenya’s and Nigeria’s are anticipated to remain mostly stable, and Uganda’s is anticipated to appreciate against the US dollar during the course of the next week until Thursday.

UGANDA

The upcoming week is expected to see a firming tendency in Uganda’s shilling, aided by hard-currency inflows from commodities exporters and charities.

The shilling was quoted by commercial banks at 3,660/3,670 to the dollar, down from 3,670/3,680 at the closing last Thursday.

“We normally receive an increase in inflows toward end of month, so I anticipate that dynamic to play out in the coming days,” a trader said.

According to him, the shilling is expected to fluctuate between 3,640 and 3,670 in relation to the US dollar.

A portion of foreign currency donations are converted into shillings by charities in order to cover overhead costs like salaries.

GHANA

As businesses in the manufacturing and commerce sectors stock up before the holiday season, Ghana’s cedi may depreciate even more due to seasonal demand for dollars.

According to LSEG data, the cedi was trading at 16.10 to the dollar on Thursday, down from 15.99 at the close of last Thursday.

In recent sessions, the local unit has been beset by foreign exchange illiquidity, which has caused the cedi to drop significantly. Local and foreign players have both expressed a desire for hard money, according to senior trader Sedem Dornoo of Absa Bank Ghana.

At the local level, the manufacturing industry appears to be the main driver of demand. Since there is still a high demand for the US dollar, I anticipate more pressure on the cedi in the upcoming week,” he stated.

The cedi was impacted, according to one trader, by the central bank’s forward auctions not adequately addressing the demand for foreign currencies on the interbank market.

NIGERIA

The central bank’s actions to accommodate the growing demand for foreign currency from importers restocking for the holiday season have supported Nigeria’s naira, which is viewed as comparatively steady.

According to LSEG statistics, the official market put the naira at 1,676 to the dollar on Thursday, whereas the closing rate was approximately 1,663 a week earlier.

At 1,728 naira to the dollar, the currency was selling at a significantly lower value on the street.

“I don’t think the central bank will allow it run too far from where we are,” a trader stated.

KENYA

Since month-end salary and tax obligations provide support, it is anticipated that Kenya’s shilling would not change.

In line with the closing rate from last Thursday, commercial banks quoted the shilling at 128.50/129.50 per US dollar.