AFRICA FX WEEKAHEAD-Ghana cedi's weakness set to persist
JOHANNESBURG Aug 22 (Reuters) - The Ghanaian cedi's woes are set to continue next week barring any intervention by the central bank to end a persistent dollar shortage, while Nigeria's naira could gain support from dollar sales by oil companies.
Ghana's cedi, currently trading at record lows against the dollar, could slide further next week as a dollar shortage in the interbank market shows little sign of easing despite a boost to the country's FX reserves from inflows for last month's Eurobond issue.
The local unit, which has weakened around 11 percent against the dollar this year, was indicated at fresh lows of 2.1200/2.1500 to the dollar at midday on Thursday.
"The situation is getting out of hand now - it would take a bold intervention by the central bank to restore stability and we don't see this happening immediately," a trader said.
Ghana's international reserves rose to $5.7 billion, representing more than three months of imports, at the end of July, from 2.7 months cover in June mainly on inflows from a $750 million Eurobond issued last month.
Sampson Akligoh, head of Databank Financial Research, said the increase in reserves could ease pressures on the currency temporarily, "but this will not lift the cedi on a sustainable basis."
The West African cocoa, gold and oil exporter also sold a debut 7-year government bond, open to offshore investors, on Thursday.
The naira is seen appreciating slightly against the dollar next week on dollar sales by oil companies operating in Africa's top crude exporter.
The local currency was trading around 161.6 to the dollar at 1016 GMT on Thursday, in line with its close the previous day.
"We have seen some oil firms selling dollars this week, helping to strengthen the naira, and we expect to see more companies sell dollars next week," one dealer said.
Traders said the naira is likely to trade within the 160.6-161 band next week.
Kenya's shilling is expected to weaken slightly next week, weighed down by importers buying dollars to pay for end-of-month shipments.
The market will also be looking ahead to the central bank's next monetary policy meeting (MPC) on Sept. 3.
At 0921 GMT on Thursday, commercial banks quoted the shilling at 87.45/65 per dollar, barely changed from Wednesday's close of 87.50/70.
"Going into next week, demand for dollars will come in," said Sheikh Mehran, a senior trader at Kenya Commercial Bank.
"Guys will also be positioning for the MPC. My expectation is a hold decision, because they (the central bank) don't want to push rates higher, but they still want to support the currency."
Tanzania's shilling is expected to extend its gains next week, helped by cotton exporters offloading dollars as the harvest season peaks and due to month-end corporate inflows.
Market participants said the shilling was expected to trade within the 1,610-1,620 range over the coming days.
"There is a general slowdown in demand for dollars in the market, with the local currency also benefiting from dollar proceeds in the ongoing cotton export season," said Theopistar Mnale, a trader at Tanzania Investment Bank.
He said companies were also expected to sell dollars as they pay taxes and salaries at the end of the month.
Uganda's shilling is seen firmer in coming sessions, supported by limited supply of the local currency in the interbank market.
At 1031 GMT on Thursday commercial banks in Kampala quoted the currency of Africa's largest coffee exporter at 2,575/2,585, weaker than last Thursday's close of 2,565/2,570.
Ahmed Kalule, a trader at Bank of Africa, said shilling supply was low, which could force banks to sell their dollars to fund their local currency positions.
"That should keep the shilling on the stronger side," he said.
Traders said overnight interest rates on the interbank market had risen to 11 percent from 7 percent a fortnight ago, while the rate on 7-day repurchase agreements was at 13 percent, up from 10 percent in the same period.
The kwacha is expected to strengthen in the coming week, propped up by corporate dollar inflows and increased selling of the greenback on the interbank market.
At 1204 GMT on Thursday commercial banks quoted the currency of Africa's leading copper producer at 5.355 to the dollar, from a close of 5.420 a week ago. (Reporting by Kwasi Kpodo, Oludare Mayowa, Kevin Mwanza, Fumbuka Ng'wanakilala, Elias Biryabarema, and Chris Mfula; Editing by Tosin Sulaiman and Susan Fenton)
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