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Currencies across several African economies are expected to experience divergent performances over the coming week, with the Ghanaian cedi, Nigerian naira and Ugandan shilling facing renewed pressure from rising demand for U.S. dollars, while Kenya’s shilling and Zambia’s kwacha are forecast to remain relatively stable.
Foreign exchange markets across Africa are expected to remain mixed in the week ahead, as stronger demand for U.S. dollars weighs on some regional currencies while supportive domestic factors help others maintain stability.
Market participants expect the Ghanaian cedi, Nigerian naira and Ugandan shilling to face downward pressure, whereas the Kenyan shilling and Zambian kwacha are likely to remain broadly steady.
The Ghanaian cedi is expected to weaken further as demand for foreign exchange, particularly from energy importers, continues to outpace supply.
The currency traded at 11.53 cedis per U.S. dollar on Thursday, compared with 11.40 a week earlier.
According to market analysts, robust demand from oil importers and other corporate buyers continues to strain the interbank foreign exchange market.
Recent foreign exchange auctions conducted by the Bank of Ghana also reflected persistent unmet demand, suggesting pressure on the local currency could continue in the near term.
Nigeria’s naira is also expected to remain under pressure after the Dangote Petroleum Refinerybegan pricing local fuel sales in U.S. dollars, a move that could increase demand for hard currency.
The naira traded at around ₦1,383 per U.S. dollar on the official market on Thursday, slightly weaker than the previous week’s level.
In the parallel market, the currency exchanged at approximately ₦1,425 per dollar.
Currency traders say investor sentiment and broader global market conditions will continue to influence the naira’s performance.
Uganda’s shilling is forecast to weaken modestly as corporate demand for dollars rebounds following the completion of mid-month tax payments.
Commercial banks quoted the currency around 3,685/3,695 shillings per dollar, marginally weaker than the previous week.
Analysts expect importers and businesses to return to the market in greater numbers over the coming days, increasing pressure on the local currency.
Kenya’s shilling is likely to remain relatively stable as foreign exchange demand and supply remain well balanced.
Commercial banks traded the currency at approximately 129.25/129.45 shillings per dollar, broadly unchanged from the previous week.
Market participants also noted recent intervention by the Central Bank of Kenya, which is believed to have purchased U.S. dollars in the market, helping maintain orderly trading conditions.
The Zambian kwacha is expected to remain broadly stable ahead of the government’s Treasury bill auction scheduled for 23 July.
Although demand for dollars has increased, analysts believe the upcoming domestic debt sale could support the local currency by attracting investor participation.
The kwacha traded around 18.44 per U.S. dollaron Thursday, compared with18.31 a week earlier.
Currency movements remain a key indicator of economic confidence across Africa. Rising demand for U.S. dollars, higher global energy prices and shifting investor sentiment continue to influence exchange rates across the continent. While countries with stronger foreign exchange inflows and supportive monetary policies may maintain stability, economies facing elevated import bills or persistent dollar shortages could experience additional currency pressure in the weeks ahead.
Source: Reuters
Reporting: Christian Akorlie, Chijioke Ohuocha, Elias Biryabarema, Vincent Mumo Nzilani and Chris Mfula.
Editing: Alexander Winning.