May 9, 2013 / 3:11 PM / 5 years ago

AFRICA FX WEEKAHEAD-Cedi seen supported by cbank dollar sales

NAIROBI, May 9 (Reuters) - Ghana’s cedi could get support from the central bank intervening by selling dollars, while the Kenyan shilling is likely to firm on dollar inflows from foreign investors seeking to buy local shares.


Ghana’s cedi is expected to be supported in the coming week on improved dollar inflows, helped by renewed investor confidence after central bank pledges to increase support for the local currency, traders said.

Central bank Governor Henry Kofi Wampah said on Wednesday he would step up the supply of dollars to the interbank market to support the cedi after it depreciated in recent weeks on increased dollar demand to pay for imports and dividend payments by international firms operating in Ghana.

A trader at Stanbic Bank Ghana said the cedi could trade between 1.9725 and 1.9850 next week on improved dollar inflows.

“We have seen some corporate (dollar) sales in the last three days complementing the central bank’s presence. It is good news for the cedi going into next week,” the trader told Reuters.

The cedi which has weakened 3.2 percent against the dollar since January, gained on Thursday to 1.9795/20 after declining 0.05 percent to close Wednesday’s trading at 1.9850.


The Kenyan shilling is seen gaining in coming sessions, helped by foreign investors selling dollars to buy local shares during the first quarter reporting season.

The shilling was posted at 83.70/80 per dollar at 0946 GMT, barely changed from last Thursday’s close of 83.60/80. Technical charts showed the shilling could firm to its 83.50 resistance level.

“There is a lot of foreign interest on the large cap stocks, especially banks, since they expect a good reporting season,” said Dickson Magecha, a foreign exchange dealer at Standard Chartered Bank.

Most listed firms are scheduled to announce first quarter results in May. Some have already reported.


The Ugandan shilling is seen appreciating as mid-month tax payments by corporate firms soften appetite for dollars.

At 0835 GMT commercial banks quoted the currency of east Africa’s third largest economy at 2,558/2,568, a touch weaker than last Thursday’s close of 2,555/2,565.

“Around mid-month dollar demand normally slumps a bit as companies use up their shillings for tax payments,” said Peter Mboowa, trader at KCB Uganda.

The local currency is up 4.6 percent stronger this year and money market analysts see it holding firm in the near-term, mostly supported because the central bank has so far proved reluctant to cut rates.


The Zambian kwacha is expected to remain flat next week largely due to limited activity on the local market.

At 0804 GMT on Thursday commercial banks quoted the kwacha at 5.300, up from 5.310 per dollar a week ago. and traders said it was expected to remain in that tight range.


The Nigerian naira is seen weakening next week as energy firms are expected to sell fewer dollars.

Dollar flows from a state-owned energy company and some other oil companies have provided support for the naira this week keeping it within the 157-158 range against the dollar.

But many firms are now coming to the end of their usual monthly cycle of dollar sales, removing that support.

“We see the naira depreciating gradually back to the 158 naira to the dollar level next week on the strength of demand in the market, unless there is additional dollar flow from energy companies,” one dealer said.

The naira closed at 157.30 to the dollar on Thursday, firmer than the 157.80 to the dollar the previous day, due to dollar flows from offshore investors in local debt.


The Tanzanian shilling is expected to weaken in days ahead, weighed down by demand for dollars from the energy sector.

Traders quoted the shilling at 1,628/1,638 to the dollar on Thursday, compared to 1,630/1,633 a week ago.

“The shilling might continue to weaken next week on the back of strong demand for dollars from oil importers,” said Patrick Kapella, chief dealer at FNB Bank Tanzania.

Market participants said the shilling was likely to trade in the 1,630-1,640 range over the coming days. (Reporting by Chris Mfula, Kevin Mwanza, Fumbuka Ng‘wanakilala, Elias Biryabarema, Oludare Mayowa; editing by Stephen Nisbet)

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