The Nigerian naira and Zambian kwacha may experience further gains against the US dollar in the coming days, while currencies in Kenya and Uganda are likely to remain stable.
But Ghana’s cedi could weaken, according to traders quoted by Reuters.
Specifically, Nigeria’s naira could gain as foreign exchange supply improves, driven by strong oil receipts and flows from foreign investors attracted by the high yields on the country’s debt.
The unit was quoted at 1,364 to the dollar in intraday trading on Thursday, strengthening from 1,388 a week ago.
The naira was changing hands at around 1,445 to the dollar in street trading .
“Market sentiment has swung firmly bullish on the naira, lifted by high oil prices and clearer FX rules. If the upcoming bond auction is strongly oversubscribed, liquidity could tighten further and push the currency toward the 1,350 level,” one trader said.
Similarly, Zambia’s kwacha is likely to continue trading on the front foot, helped by improving macroeconomic fundamentals and resilient copper prices.
On Thursday the currency of Africa’s second-largest copper producer was trading at 19.09 per dollar, better than 20.29 a week ago.
Economist Kelvin Chisanga said central bank measures restricting foreign-currency usage were also supporting the kwacha.
Kenya’s shilling is expected to hold steady, as dollar demand from manufacturers and oil-marketing companies matches inflows from the tourism and horticulture sectors.
Commercial banks quoted the shilling at 128.90/129.10 per dollar, the same as at last Thursday’s close.
“It has been steady. Supply and demand has been equally matched,” a trader said.
Uganda’s shilling is seen stable until Monday, as traders hold off from taking positions ahead of an interest rate decision by the central bank.
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Its direction after that could be influenced by Monday’s rate announcement.
“We’re likely to see relatively subdued activity ahead of the (monetary policy) meeting,” a trader said.
Commercial banks quoted the shilling at 3,553/3,563 to the dollar compared with last Thursday’s close of 3,561/3,571.
However, Ghana’s cedi could face headwinds next week on persistent hard-currency demand from sectors including energy.
LSEG data showed the cedi trading at 10.95 to the U.S. currency from 10.90 a week ago.
“A stronger dollar is likely to persist in coming sessions, spurred by unfilled demand observed at recent central bank FX auctions,” said Andrews Akoto, head of trading at Absa Bank Ghana.
Another trader said the cedi had shown a gradual weakness in recent sessions as demand for dollars continued to outweigh supply.
“The cedi is likely to weaken further in the coming week,” the trader added.