ACCRA, June 26 Ghana's cedi may keep testing new
lows next week, while tax season in Tanzania and Uganda should
lend support to the east African currencies.
Ghana's cedi will remain under pressure against the
dollar next week as importers hunt for dollars during a period
of poor interbank liquidity, analysts said.
The local unit, which has depreciated 36 percent so far this
year, hit a record low of 3.3400/dollar on Wednesday. Dealers
said the central bank came into the market on Thursday to ease
the liquidity pressure and support the cedi.
It recovered to 3.1900 by midday, but traders say with too
few dollars in the market to meet demand, the unit could keep
testing new lows.
Barclays Africa forecast the cedi to end the year at 3.6000
to the dollar.
"The risk of a further disorderly move in the cedi exists,
particularly as foreign reserves are seen weak," Jeff Gable,
Barclays head of Africa research said in a note.
However, a planned eurobond sale of up to $1.5 billion in
July, and inflows from a cocoa loan syndication in September
could ease the pressure in the short term, Gable said.
The central bank reported that international reserves
amounted to $5.1 billion - or 2.8 months of import cover - in
Kenya's shilling should receive support from the sale
of a debut $2 billion bond last week.
Commercial banks quoted the shilling at 87.75 to the dollar
on Thursday, from 87.30 a week ago.
"I think 88 should hold. In the past month, 88 has been
protected by the central bank, and now they even have renewed
ammunition to do that in terms of the eurobond," said Andlip
Nazir, a trader at I&M Bank.
The shilling has lost about 1.7 percent against the dollar
this year and has continued to face pressure due to a steep drop
in tourist numbers after a series of deadly attacks by Somali
Islamist militants, Nazir added.
The Tanzanian shilling is expected to extend its gains
against the dollar next week, buoyed by cotton exports and end
of quarter tax payments.
Commercial banks quoted the shilling at 1,660 to the dollar
on Thursday, stronger than 1,684 a week ago. Traders said they
expected the shilling to trade in the 1,670-1,680 range over the
next few days.
"Many corporates are currently offloading dollars to make
quarter-end tax payments in shillings," said Theopistar Mnale, a
trader at TIB Development Bank.
"Inflows of dollars from the onset of the cotton export
season are also expected to help the shilling to extend its
rally against the U.S. dollar."
The Central Bank of Tanzania said on its website that it
traded $35.5 million on the inter-bank foreign exchange market
over the past week.
The Ugandan shilling is forecast to hold steady next
week as demand for dollars from importers decreases and
companies swap into the local currency to pay taxes.
At 1131 GMT commercial banks quoted the shilling at 2,590,
weaker than last Thursday's close of 2,575.
"Demand from corporate buyers has been sort of coming off
which could keep the shilling stable around 2,590 levels," said
Faisal Bukenya, head of market-making at Barclays Bank.
Other firms were holding off buying dollars at these levels,
expecting the shilling to weaken in the longer term.
The local currency came under pressure in the past week as
the United States, a major donor, cut back some aid because of
Uganda's anti-gay law. The central bank stepped in to support
Nigeria's naira currency is seen trading in a tight
band next week as additional dollars in the market from
state-owned energy company NNPC limit the naira's recent
The local currency closed at 162.85 to the dollar on
Thursday, not far off a 162.90 close the previous day.
"We see the naira trading within a narrow band next week as
some oil companies are still expected to sell more dollars in
the coming days," one dealer said.
Dealers expect the kwacha will receive support
through offshore inflows and month-end transactions, which could
take the currency out of its recent range.
The Bank of Zambia earlier this month raised the effective
annual lending rate to 28 percent from 21 percent, a move
analysts said would attract foreign investors to government
securities, boding well for a currency that tumbled to life-time
lows in May.
The unit has since recovered and hit three-month highs last
week according to Thomson Reuters data.
At 0858 GMT on Thursday, commercial banks quoted the
currency of Africa's second-largest copper producer at 6.1050
per dollar, compared with 6.1250 a week ago.
The kwacha was expected to receive a further boost from
corporates converting dollars to the local unit to meet month
end obligations such as salaries.
(Reporting by Kwasi Kpodo in Accra, Drazen Jorgic in Nairobi,
Elias Biryabarema in Kampala, Fumbuka Ng'wanakilala in Dar es
Salaam, Oludare Mayowa in Lagos and Chris Mfula in Lusaka;
Editing by Xola Potelwa)