Uganda’s shilling is forecast to weaken on expected demand from commercial banks and importers, fuelled by the central bank’s lack of intervention, while Ghana, Kenya and Tanzania’s currencies are expected to remain steady.
The Ugandan shilling is seen weakening this week, undermined by anticipated panicked demand from commercial banks and importers as the central bank stays away from the markets.
At 1044 GMT commercial banks quoted the shilling at 3,810/3,820, weaker than last Thursday’s close of 3,770/3,780.
The shilling has posted sharp losses in recent days, undercut by strong demand from both commercial banks and manufacturing and fuel importers. It’s 4.7 percent weaker against the dollar so far this year.
A trader at a commercial bank said the central bank of Uganda’s refusal to intervene to support the shilling “has fuelled speculation” on the currency of the East African coffee producer.
“So the silence of the central bank, not coming out with a comment or intervening is fuelling anxiety and will cause further weakening,” he said.
The Nigerian naira is seen stable at around 362 to the dollar this week after the currency eased slightly last week and came under renewed pressure from importers, traders said.
Trades were thin by midday on Thursday as most wanted to buy the dollar, with little supply. The naira last traded at 362.50 on the currency market on Wednesday.
It was quoted at 305.95 on the official interbank market on Thursday, supported by the central bank’s regular interventions.
The central bank said on Thursday it may conduct bids for the Chinese yuan twice in a week in an attempt to reduce its reliance on the U.S. currency for imports from Asia and support the naira.
Ghana’s cedi is seen stable mainly on increased dollar sales by the central bank to lenders and targeted local businesses, analysts said.
The local unit, which was fairly stable in the first quarter, came under pressure in the past month, touching 4.745. It recovered marginally to 4.705 by mid-morning on Thursday, from 4.700 a week ago.
The market is beginning to see an increased in central bank support in the past two weeks and this is expected to eventually stabilize the local unit,” said currency analyst Raphael Adubila.
The Kenyan shilling is expected to remain firm against the dollar this week due to inflows from offshore investors although a global rise in oil prices was seen adding pressure, traders said.
Commercial banks quoted the shilling at 100.70/90 per dollar, compared with 101.40/60 at last Thursday’s close.
“We expect it to remain steady for the time being but we could see some underlying pressure from rising oil prices,” said a senior trader from a commercial bank.
The Tanzanian shilling is seen holding steady in the days ahead, helped by subdued demand for dollars from importers and hard currency inflows from the agriculture sector.
Commercial banks quoted the shilling at 2,270/2,280 to the dollar on Thursday, stronger than 2,276/2,286 a week ago. “There is no major demand for dollars in the market and the shilling is really improving due to forex inflows from cotton exports,” said a trader at Commercial Bank of Africa Tanzania.
The kwacha is expected to remain range-bound supported by dollar conversions to pay taxes which are due on June 14.
At 1245 GMT on Thursday, commercial banks quoted the currency of Africa’s No.2 copper producer at 10.0900 per dollar from 10.3000 a week ago.
“It will more or less remain within the current levels, mainly driven by demand and supply of dollars,” independent financial analyst Maambo Hamaundu said.