Nigeria’s naira is
seen stuck in a tight range in the coming week, drawing support from possible
dollar flows from offshore investors and foreign energy companies selling
dollars to banks.
The local currency
has traded around 161.90-162.70 against the dollar in the last two weeks on
support from consistent greenback flows from oil companies’ month-end dollar
sales and inflows from offshore investors buying local debt.
The naira traded at
161.85 to the dollar on Thursday, compared with its 161.90 close the previous
day, and traders see no major change in the value of the currency in the near
term.
“Market is dollar
liquid to support the present demand from importers, we are not expecting very
much change from the present value of the naira as long as
there’s continuous
dollar flow,” one dealer said.
Ghana’s $1.5 billion
Eurobond issue due later this month is expected to boost the flagging cedi,
while Nigeria’s naira is seen stuck in a range.
GHANA
Ghana’s cedi could
begin a gradual recovery against the dollar in coming weeks on offshore
greenback sales, boosted by expected Eurobond and cocoa inflows, traders said.
The local unit has
remained stable in the past two weeks, after plunging about 30 percent in the
first half of the year due to a shortage of dollars and concerns over a weak
economy. It was trading at 3.4050 to the dollar at 1220 GMT on Thursday.
Analysts forecast
depreciation at a significantly lower pace in the second half of the year as
cocoa inflows kick in.
“The cedi’s
depreciation has eased significantly as a result of this improvement in
(offshore) inflows. We are likely to see some gains in local currency (against
the greenback) if forex improves further,” a Barclays Bank Ghana analyst said.
Finance minister Seth
Terkper on Wednesday cut the government’s 2014 growth target and forecast a
wider budget deficit and higher inflation, citing falling revenues, the slide
of the cedi and declining gold prices.
Ghana is set to issue
a third Eurobond of up to $1.5 billion later this month. The government will
also sign a syndicated loan of $2 billion for next year’s cocoa purchases,
Terkper said, noting that the inflows will boost the country’s reserves in
support of the cedi.
KENYA
The Kenyan shilling
is expected to ease in the week ahead due to increased liquidity in the money
markets and falling short-term debt yields.
At 0735 GMT, banks
quoted the shilling at 87.70/80 to the dollar, compared with last Thursday’s
close of 87.60/70.
“The shilling in
coming days should be under pressure once the corporate taxes are paid. So the
liquidity in the market would weigh on the shilling,” one senior trader said.
“The market will be
liquid and also declining interest rates in the short term should support the
dollar.”
The weighted average
interbank lending rate rose slightly on Thursday to 7.1248 percent from 7.0697
percent a day earlier, but was still below the 7.3925 percent level seen last
week.
During Wednesday’s
auction, the weighted-average yield on the 182-day Treasury bills fell to
10.430 percent from 10.970 percent last week.
TANZANIA
The Tanzanian
shilling is expected to remain steady against the U.S. dollar in the days ahead
and could weaken slightly if the liquidity squeeze on the local currency eases,
traders said.
Commercial banks in
east Africa’s second-biggest economy quoted the shilling at 1,657/1,667 to the
dollar on Thursday, stronger than 1,662/1,672 a week ago.
“We expect the
shilling to trade at current levels next week, but the local currency could
depreciate if the tight liquidity situation eases,” TIB Development Bank dealer
Theopistar Mnale said.
Market participants
said they expect the shilling to trade in the 1,650-1,660 range over the coming
days.
UGANDA
The Ugandan shilling
is forecast to firm in coming days, boosted by positive market sentiment due to
an expected surge in export earnings and an uptick in government debt rates.
At 0953 GMT
commercial banks quoted the shilling at 2,610/2,620, up from last Thursday’s
close of 2,663/2,673.
“There’s favourable
sentiment in the market for the shilling coming from the news on exports,”
Crane Bank trader Shahzad Kamaluddin said.
“The rise on yields
at yesterday’s auction is also strengthening confidence … overall the shilling
looks poised for strong gains,” he said.
State-run Uganda
Export Promotion Board (UEPB) forecast this week that 2014 export earnings
would grow by 15 percent from last year, boosted by broader regional market
access.
BusinessDay
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