Nigeria’s naira to pare gains, Ghana’s cedi to firm

The Nigerian naira is expected to pare some of its recent gains next week as traders seek to stock up on dollars.


The Nigerian naira is expected to weaken a little on the parallel market as some traders are seen taking advantage of a recent rally to mop up dollar liquidity.

The local currency was quoted by traders on the parallel market at 350 to the dollar on Thursday, better than 365 to the dollar last week, but weaker than the previous day.

The naira rate remains flat around the peg rate 197.50 on the official interbank market. Central bank curbs were introduced late last year to defend a currency peg which have restricted access to dollars.

The currency of Africa’s biggest economy rallied in the week to around 300 a dollar after President Muhammadu Buhari on Saturday rejected the idea of devaluing the naira, despite mounting pressure from an economic crisis caused by a sharp fall in the price of oil, Nigeria’s dominant export.

Aminu Gwadabe, head of Nigeria’s association of bureau de change operators said “hoarding and speculative activities have returned to the market, pushing down the naira value again.”


Ghana’s cedi is expected to gain marginally on positive market sentiment ahead of a 5-year domestic bond to be issued next week, analysts said.

After weakening nearly 4 percent in January on seasonal dollar demand from importers and speculative buyers, the cedi has held firm in recent weeks. It was quoted at 3.89 to the greenback at 0948 GMT on Thursday, compared with 3.92 last week.

“Market sentiment about the cedi’s performance has been positive recently, erasing fears of a possible first quarter cedi depreciation,” analyst Joseph Biggles Amponsah of Dortis Research said.


Kenya’s shilling is expected to hold steady but could come under pressure due to end-month importer dollar demand, traders said. Commercial banks quoted the shilling at 101.70/80 to the dollar, compared with last Thursday’s close of 101.75/85.

“I don’t see much movement. Maybe a bit of (dollar) demand towards the end of the month,” a trader at one bank said.


The Tanzanian shilling is seen firming against the dollar in the days ahead, helped by a subdued demand for the U.S. currency from large importers. Commercial banks quoted the shilling at 2,185/2,195 to the dollar on Thursday, weaker than 2,183/2,193 a week ago.

“The currency has been very stable over the past few weeks. There isn’t any big demand for dollars nor much inflows, so we expect the shilling to remain stable over the coming days,” said Hakim Sheikh, a dealer at Commercial Bank of Africa Tanzania.


The Ugandan shilling is forecast to weaken over the next week as business activity gradually picks up after elections and likely spurs an uptick in demand for dollars.

At 0956 GMT commercial banks quoted the shilling at 3,365/3,375, stronger than Wednesday’s close of 3,420/3,430. Thursday was a national holiday in Uganda.

Traders say business slumped last week as Ugandans voted in a presidential election won by incumbent Yoweri Museveni but criticised as a sham by his main rival, Kizza Besigye.


The kwacha is expected to firm next week due to dollar conversions by companies preparing to pay salaries and other month-end obligations due in the local currency.

At 1020 GMT on Thursday, commercial banks quoted the currency of Africa’s second-biggest copper producer at 11.3750 per dollar, weaker than 11.3000 at which it closed a week ago.


Source: Reuters