African currencies show signs of stability and potential against US dollar

The report by CNBC focuses on the Kenya Shilling, Ghana’s Cedi, Nigeria’s Naira, Zambia’s Kwacha, and Uganda’s Shilling, and the article highlights various factors contributing to the performance and potential movements of these currencies.

The Kenya Shilling is expected to strengthen against the U.S. dollar due to remittances and offshore dollar inflows aimed at purchasing government bonds.

Yesterday, the Shilling was quoted at 128.50/129.50 per dollar, a marginal improvement from 129.00/130.002 per dollar last Thursday.

Kenyan traders expect the shilling to strengthen further against the dollar after the government announced its plans to raise at least 50 billion Shillings ($379.8 million) from tax-exempt securities between July 25 and August 14.

This move will likely attract foreign investor interest and bolster the currency as the coupon on the reopened 6.5-year bond is 17.9327%, and 14.399% for the reissued 17-year bond.

In Ghana, the Cedi is also expected to remain stable, trading at 15.54 per dollar, slightly up from 15.48 the previous week.

Forex traders predict stability with balanced demand and supply in the interbank market, provided aggressive bidders don’t re-enter the market. They also noted that upcoming coupon payments on restructured bonds could exert some pressure on the Cedi.

In Nigeria, the Naira is expected to hold steady against the dollar in the coming week following the central bank’s intervention to ease market pressure amid the ongoing protests in the country.

Yesterday, the Central Bank of Nigeria auctioned $876.3 million to 26 banks at a cut-off rate of 1,495 naira per dollar. This strengthened the naira, which is currently quoted at 1,580 to the dollar on the official market, down from 1,625 a week ago.

Zambia’s Kwacha is likely to remain stable with minor gains due to improved dollar inflows and reduced demand for hard currency.

The kwacha traded at 26.05 to the dollar, up from 25.95 the previous week. Market liquidity and a slowdown in importer demand are expected to support the currency.

Uganda’s Shilling may weaken slightly following the central bank’s interest rate cut. The shilling was quoted at 3,725/3,735 to the dollar, compared to 3,730/3,740 last week10. Negative sentiment from the rate decision could weigh on the shilling, though significant movement is not anticipated.