Zambia's kwacha strengthens while Ghana's cedi under pressure
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Zambia's currency is expected to strengthen against the dollar in the next week to Thursday, while Ghana's and Uganda's are seen losing ground and Kenya's should be broadly stable, traders said. The divergent trends reflect different economic pressures across these East and West African economies.
Zambia's kwacha is likely to gain against the U.S. currency next week, supported by steady inflows from the mining sector. On Thursday, the kwacha was quoted at 18.69 per dollar from 19.01 a week ago, showing clear improvement in the currency's value.
"Elevated copper prices, which remain near record highs, continue to provide strong support. The kwacha is also reaping the benefits of the dedollarisation directive introduced in December, as well as the restructuring of the national debt," said Diego Barnuevo, an analyst at financial services firm Ebury. These multiple factors are driving the kwacha's positive performance.
Ghana's cedi is seen extending its gradual depreciation on robust corporate foreign-currency demand. LSEG data showed the cedi trading at 11.67 to the dollar, compared to 11.54 a week earlier, indicating continued downward pressure on the currency.
"Sustained corporate FX demand for imports and dividend repatriation is expected to keep the cedi under pressure," said Andrews Akoto, head of trading Absa Bank Ghana. Another trader said dollar demand remained elevated, outstripping supply on the interbank market and that the current trend would continue in the near term.
Uganda's shilling is seen trading with a weakening tone, undercut by higher foreign-currency demand in the lead-up to the country's budget on June 11. Commercial banks quoted the shilling at 3,770/3,780 to the dollar, compared to last Thursday's close of 3,775/3,785.
"Typically we tend to see strong appetite before the budget reading because there's a bit of uncertainty about how potential new tax policies might impact the FX market, so banks, importers and others want to be on the safe side," a trader said. Kenya's shilling is forecast to be little changed, with commercial banks quoting the shilling at 129.25/65 per dollar compared with last Thursday's close of 129.50/95.
