African markets: Zambian Kwacha gains, other currencies steady
Zambia’s kwacha is expected to gain more ground next week on dollar sales by companies seeking to pay local salaries and taxes, while most other currencies are seen stable before the year-end holidays.
The kwacha gained more than 5 percent on Thursday and is likely to remain bullish as companies sell hard currency to pay end month payments due in local currency.
At 1221 GMT on Thursday, commercial banks quoted the currency of Africa’s No.2 copper producer at 10.9800 per dollar, stronger than 11.5500 a week ago.
“Corporate sellers continue being seen in the market converting for kwacha to meet monthend obligations. However, concens over Zambia’s copper business which remains at risk due to declining copper prices continues to dampen the outlook for the kwacha in the long term,” BancABC said in a note.
The Kenyan shilling is expected to trade in a range between 101.70 to 102.50 to the dollar due to sluggish appetite for greenbacks by importers before the holidays.
The shilling was trading at 102.10/20 on Wednesday afternoon compared with 102.15/25 at last Thursday’s close. Thursday is a public holiday in Kenya.
“Demand for dollars is lethargic,” said a senior currency trader with a commercial bank.
Firms usually wind down activity as the year draws to a close, curbing demand for dollars. The central bank has also been intervening with dollar sales to stabilise the currency.
The shilling is expected to strengthen in the days ahead, helped by a slowdown in business activity ahead of the year-end festive season and inflows from the agriculture sector.
Commercial banks quoted the shilling at 2,165/2,175 to the dollar on Thursday, weaker than 2,155/2,165 a week ago.
“We expect the shilling to appreciate against the dollar next week due to a slowdown in business ahead of the Christmas and New Year holidays and inflows from cashew nut exports,” said Theopistar Mnale, a dealer at TIB Development Bank.
The shilling is forecast to trade weaker over the next one week on a likely rebound in appetite for the greenback and negative sentiment spurred by speculation on possible interest rate hike by the U.S. Federal Reserve.
At 0945 GMT commercial banks quoted the shilling at 3,355/3,365, stronger than last Thursday’s close of 3,375/3,385.
“Demand pressures are likely to resurrect in the coming week as end month dynamics wear off,” said Stephen Kaboyo of Alpha Capital Partners.
“The global dollar strength and likelihood of a lift off of U.S. interest rates will undermine frontier market currencies.”
Ghana’s cedi is expected hold steady on dwindling corporate dollar demand amid a slowdown in market activities.
The local currency has been fairly stable in the past three months after slumping nearly 30 percent in the first half of the year. It was trading at 3.82 to the greenback at 1100 GMT on Thursday, compared to 3.83 a week ago.
“The cedi is holding steady and will likely extend it’s recent stability to another week,” said Joseph Biggles Amponsah of the Accra-based Dortis Research.
The naira is seen stable on both the parallel and official interbank markets, traders said.
The central bank further tightened the regulation on forex sales to bureaux de change operators, directing them to give accounts on dollar purchased from within a week of its intervention in the market or return the total amount bought.
The naira firmed on Thursday to 135 against the dollar compared with 140 the previous day, while it remained stable at the interbank market at 197 to the dollar.
For Citizen TV updates
Join @citizentvke Telegram channel
Video Of The Day: CAS Rachel Shebesh and athlete Asbel Kiprop share their mental health journeys