African Reserves Loans

WEEKAHEAD-AFRICA-FX- Ghana and Nigeria currencies weaken, others strengthen

NAIROBI, October 20 (Reuters)Units from Ghana and Nigeria will weaken against the dollar in the week to Thursday, while the Ugandan and Tanzanian currencies will strengthen and the Zambian kwacha will be stable, traders said.

GHANA

Ghana cedi GHS= is expected to weaken further in the coming days as speculative trading intensifies, following a week of record deterioration.

Data from Refinitiv Eikon showed the cedi trading at 12.75 to the dollar on Thursday, down from 10.50 at last Thursday’s close. The World Bank has called it the worst performing currency in Africa.

“We expect the cedi to weaken further next week, largely due to huge underlying business and retail demand for the greenback, and panic buying spurred by fears of restructuring in the US. debt,” said Chris Nettey, head of trading at Stanbic Ghana.

Rumors of domestic debt restructuring or a possible sovereign default increased the demand for foreign currency liquidity.

Observers last week hoped a $1.3 billion loan for government cocoa purchases would offset cedi losses, but analysts are now doubtful.

“It is unlikely that even the flows of [the cocoa loan] will cause a reversal of course,” Absa Bank said in a note Thursday. “This depreciation shows no signs of slowing down.

NIGERIA

The Nigerian naira is expected to decline in the parallel market next week after hitting a record low on the black market as pressure mounted on the currency due to rising import demand and dwindling foreign exchange reserves, traders said.

Currency NGNP= fell to 745 naira to the dollar in the parallel market on Thursday. It closed at 740 naira to the dollar a week ago.

“Strong import demand and dwindling foreign exchange reserves continue to put pressure on the naira, which we expect will result in further losses against the dollar in the near term,” the company said. exchange AZA Finance in a note.

The unit was trading in a range of 440 to 441 naira per dollar in the official market NGN= Thursday, compared to a range of 419 to 430 naira in September. The central bank periodically moves its range to adjust to the demand for hard currencies.

UGANDA

The Ugandan shilling UGX= is expected to strengthen as dollar inflows from remittances and commodity exporters outweigh demand from importers.

Commercial banks quoted the shilling at 3,800/3,810, from last Thursday’s close of 3,825/3,835.

“Inflows from remittances are quite strong on the one hand while on the other the appetite of importers is weak,” said an independent forex trader in the capital Kampala, adding that the shilling could trade between 3770 and 3800.

Remittances from Ugandans working abroad typically increase in the last three months of the year, with some returning home or sending money to relatives for the holiday season.

TANZANIA

Tanzanian shilling TZS= is expected to gain ground, supported by dollar inflows from agricultural exports.

Commercial banks quoted the shilling at 2,327/2,337 on Thursday, unchanged from last week’s close.

“We expect the shilling to strengthen over the coming week, supported by increased stock market activity and inflows of export crops, including cashews, tobacco, coffee and cotton,” said a trader at a bureau de change.

ZAMBIA

The kwacha ZMW= is expected to remain stable, supported by corporate dollar sales to meet local currency-denominated obligations late in the month.

On Thursday, commercial banks quoted the currency of Africa’s second largest copper producer at 16.1000 to the dollar from 16.0000 at the close of business a week ago.

“Demand for hard currency from the energy and agriculture sectors will likely be met by conversions to dollars to meet month-end dues such as wages,” said a trader at a commercial bank.

(Reporting by Elias Biryabarema, Chris Mfula, Nuzulack Dausen, Chijioke Ohuocha and Cooper Inveen; Compiled by Hereward Holland; Editing by James Macharia Chege)

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