Ghana's cedi is in danger of sliding to a record low against the dollar next week, while Kenya's shilling, which has been hammered throughout the year, may finally find support from a central bank interest rate increase.
GHANA The cedi may well plumb an all-time low against the dollar after a sudden bout of weakness in the last two days triggered by hefty corporate demand for the greenback and limited supply, traders said. Christopher Nettey of Standard Bank quoted the cedi at 1.5690/15 on Thursday, softer than yesterday's close of 1.5665/90. The currency plumbed a record low of 1.575 on February 3, according to Reuters data. "I expect the cedi to drop down to as low as 1.58 due to pressure from offshore investors buying dollars from our market," Nettey said.
KENYA Kenya's shilling, which has lost 17.5 percent against the dollar this year, may gain as the impact of a 75 basis point central bank rate increase slowly sinks in, taking the edge off panic dollar buying, traders said. "I see us trading in a wide range with a bias for the shilling strengthening. The rate hike should be shilling positive," said Standard Chartered trader Dickson Magecha.
"On reflection it can be said that the central bank took an aggressive stance to try and contain inflation. The panic buying (of dollars) that was there is now subsiding." Traders said they expected the shilling to trade within 93.50-95.50 range next week, with a bias for strengthening.
UGANDA Uganda's shilling, which has shed nearly 10 percent against the dollar so far this year, may weaken slightly due to demand for the US currency from the energy sector and other importers. Commercial banks quoted the shilling at 2,780/2,790, from last Thursday's close of 2,790/2,800.
"We're moving toward the last quarter of the year and around this time dollar demand accelerates sharply as businesses start to import for year-end shopping and festivities," said Rogers Lutaaya, a trader at Bank of Africa. Traders said 2,800 was likely to be the shilling's resistance level, and 2,870 support.
TANZANIA Tanzania's shilling, which hit a record low of 1,640 against the dollar this week is likely to stay on the back foot due to oil sector dollar demand although some foreign exchange inflows could offer support. Commercial banks quoted the shilling at 1,636/1,641 to the dollar, compared with last Thursday's close of 1,626/1,631.
"We are seeing a gradual depreciation of the shilling. There is some demand from oil companies on a one-off basis, but nothing pressing," said Eric Chijoriga, a dealer at National Bank of Commerce. Traders said they expected the shilling to trade in the 1,630s in the coming days.
ZAMBIA Zambia's kwacha is expected to post gains after several central bank interventions in the last two weeks, although this could unwind if September 20 elections are marred by violence or end up with a disputed result, traders said. The currency has traded in the 4,600-4,800 band for most of the last 12 months, although the looming elections have caused it to weaken outside that band in the last month.
"The central bank has shown a lot of reluctance for the kwacha to go beyond 5,000," said Nema Ramkhelawan, a currency analyst at Rand Merchant Bank in Johannesburg. "That's been a key resistance level and we've seen them intervene on quite a few occasions in the last two weeks."