Ghana's cedi is likely to halt its two-week slide against the dollar next week due to central bank intervention, a factor that is also likely to underpin east Africa's shillings.
GHANA The cedi is likely to halt a precipitous two-week slide against the dollar after the Bank of Ghana pledged "more regular and robust" intervention in the foreign exchange market, traders said. The West African oil-producer's currency lost 10 percent against the dollar last year as investors worried about euro-zone debt pulled out of frontier market assets, and has lost another 3 percent since January 1 to a record low of 1.744 this week.
Kobla Nyaletey, chief trader at Barclays Bank Ghana, said the cedi could rebound if the central bank stepped up its support. "It really depends on how prompt the central bank's rescue plan for is," Nettey said. Renaissance Capital economist Yvonne Mhango said the cedi was likely to stabilise around 1.70 throughout 2012.
KENYA Kenya's shilling is expected to see-saw in coming days due to increased importer demand for dollars to meet month-end obligations, while the central bank steps up its intervention to defend the currency. Traders said the central bank wanted a stronger shilling, in line with a tight policy stance that has seen it consistently mop up excess liquidity by selling unspecified amounts of hard currency.
The Central Bank of Kenya offered bills worth 3 billion shillings ($34.7 million) for the 182-day Treasury bill on Wednesday, receiving bids worth 6.9 billion shillings. It accepted bids worth 5.6 billion shillings. A Bank of Africa report said the shilling, which has recovered almost completely from a dramatic collapse to 107 in October, would trade between 85.50-86.50 with a slight weakening bias.
UGANDA Uganda's shilling is likely to strengthen marginally due to local currency scarcity and sluggish dollar demand from companies. Commercial banks in Kampala quoted it at 2,390/2,400, stronger than last Thursday's close of 2,420/2,430. "Trading activity is thin and this is largely because of weak demand from the usually big buyers like manufacturers," said a trader from a leading commercial bank. "Unless this improves, the shilling will remain in a narrow range."
TANZANIA Tanzania's shilling is seen holding steady but may strengthen slightly due to dollar sales from the central bank and subdued demand for greenbacks. Commercial banks in Dar es Salaam quoted the shilling at 1,589/1,599 to the dollar at Thursday's close, weaker than last Wednesday's 1,578/1,588. Markets were closed in Tanzania last Thursday for a public holiday. "The shilling is expected to remain stable next week or marginally appreciate because of the continued strong intervention of the central bank in the market," said Theopistar Mnale, a trader at Tanzania Investment Bank.