LUSAKA – Zambia’s kwacha could come under pressure next week on limited exports due to lower copper production, while currencies in other countries are seen steady amid slack dollar demand.
ZAMBIA
The kwacha may come under pressure due to limited inflows of hard currency into Africa’s second-largest copper producer.
At 1032 GMT, commercial banks quoted the southern African nation’s currency at 11.1670 per dollar, up from a close of 11.2700 a week ago.
“We continue to experience low dollar supply on the domestic front as most corporate entities have stayed out of the market,” BancABC analysts said in a note.
Economist Lubinda Habazoka of the Copperbelt University said Foreign Direct Investment had reduced due to limited copper mining activity and limited exports of the metal.
An electricity shortage has stunted the mining sector, while weaker copper prices due to slower growth in China have put pressure on Zambia’s economy and currency.
NIGERIA
The naira is expected to weaken slightly in the parallel market as a dollar shortage persists after the central bank reduced the sale of greenbacks.
“The naira will continue to trade at a premium against the dollar on the parallel market as long as dollar supply sources are limited,” one trader said.
The naira traded at 306 to the dollar on the parallel market, unchanged from last Thursday, and at 197 per dollar in the official market, near its exchange rate peg set by the central bank.
The central bank halted dollar sales to bureaux de change operators two weeks ago in a bid to conserve its foreign reserves and steam currency speculations in the market.
UGANDA
The shilling is forecast to trade in a stable range, underpinned by a dip in demand due to political uncertainty ahead of presidential elections and reduced import activity.
At 1036 GMT, commercial banks quoted the shilling at 3,463/3,473, stronger than last Thursday’s close of 3,470/3,480.
“I am anticipating a stable range for shilling mainly due to election related political uncertainty,” said Ahmed Kalule, trader at Bank of Africa, referring to Uganda’s presidential election due on Feb. 18.
Kalule added importer activity was also expected to slow with new shipments orders decreasing due to the coming Chinese holiday. He expected the shilling to play in 3,440-3,480 range against the greenback over next few days.
KENYA
The shilling is expected to trade in a tight band of 102.00-102.50 in the next week mainly due to a balanced supply of demand of dollars. The shilling has been stable this year after weakening 11 percent last year.
At 1220 GMT, commercial banks posted the shilling 102.10/20, barely changed from last Thursday’s close of 102.20/30.
“Demand and supply of dollars is more or less matched,” said a trader with a commercial bank.[pro_ad_display_adzone id=”70560″]
GHANA
Ghana’s cedi is expected to hold steady after the central bank kept its benchmark lending rate unchanged.
After weakening nearly 4 percent in the first three weeks of January on seasonal dollar demand from local importers and speculative buyers, the cedi has been stable this week.
The currency was quoted at 4.000 to the dollar at 1225 GMT on Thursday, according to Thomson Reuters data.
“In the week ahead, the pair is likely to remain stable within the 3.95-3.98 band owing to some degree of balance around the demand and supply side of the market,” analyst Joseph Biggles Amponsah of Dortis Research said.
The central bank decided on Jan. 25 to hold its main lending rate at 26 percent as it attempts to bring down double-digit inflation, although a fragile currency still poses a threat to stable prices. (Reuters)