ACCRA, Oct 15 (Reuters) - Ghana’s cedi is expected to continue weakening next week, pending the impact of expected inflows from a dollar loan and Eurobond, while high government debt yields attracting dollar inflows will likely see Kenya’s shilling steady.
The cedi could continue to fall about 3.9 percent against the dollar as a rally in advance of expected inflows from a dollar loan and Eurobond has not taken hold, traders said.
The cedi, which rebounded strongly in July after slumping nearly 30 percent in the first half of the year, was trading at 3.8250 at 1222 GMT on Thursday.
“It has become apparent that until the proceeds of the bond are brought to the market, traders are not willing to short-sell it,” said Joseph Amponsah of Dortis Research in Accra. “This may be due to uncertainties regarding the timing of the sales and the size that would be brought to the market.”
The government launched a Eurobond at a 10.75 percent coupon rate last week. It also signed a $1.8 billion loan deal in Paris in September for 2015/16 crop purchases. Both these factors should support the currency in the months ahead.
The shilling is expected to trade steady, with unusually high government debt yields attracting dollar inflows from foreign investors and supporting the local currency.
The shilling was trading at 103.20/30 per dollar on Thursday, weaker than last Thursday’s close of 103.00/10.
“(The shilling will) be helped by the high yields on Treasury bills,” said a trader at one Nairobi-based commercial bank, referring to foreign investors who have been attracted by interest rates on government Treasury bills of more than 20 percent, far above what Kenya usually pays for short-term debt.
The Tanzanian shilling will likely weaken slightly in the days ahead, weighed down by demand from energy, manufacturing and trading sectors.
Commercial banks quoted the shilling at 2,185/2,195 to the dollar on Thursday, weaker than 2,165/2,175 a week ago.
“We expect the shilling to depreciate marginally against the dollar next week ... Inflows of the U.S. currency to the market have shrunk, probably because of the upcoming (Oct. 25) general election and the fact that it is the middle of the month,” said Sameer Remtulla, a dealer at Commercial Bank of Africa Tanzania.
The Ugandan shilling is seen firming next week due to muted dollar demand as the market awaits the outcome of the central bank’s rate-setting meeting.
At 1106 GMT commercial banks quoted the shilling at 3,670/3,680, firmer than last Thursday’s close of 3,675/3,685.
“(Dollar)buying activity will be limited ... before the rate decision,” said a trader at a leading commercial bank.
The trader said the shilling will play in the 3,660-3,700 range before Bank of Uganda’s Central Bank Rate (CBR) decision due on Tuesday.
The kwacha is expected to be relatively stable as the price of copper, Zambia’s main export, remains largely unchanged.
At 0932 GMT on Thursday, commercial banks quoted the currency of Africa’s No.2 copper producer at 11.6500 per dollar stronger than a close of 11.8900 a week ago.
“Copper prices are not showing signs of significant recovery and neither are they tumbling, hence the stability that we are seeing. Fundamentals have not significantly changed and with no new variables being introduced into the equation the kwacha will be stable,” BancABC country head of treasury John Mapiye said.
The naira is expected to hold steady as the central bank sustains its support for the local currency at both the official interbank and parallel forex markets.
“The naira is seen trading within a range next week due to the effects of the various measures introduced by the central bank to support the naira, which include increased liquidity and restrictions of currency trafficking,” Aminu Gwadabe, president of Bureau de change operators, said.
The local currency was trading at 225 to the dollar on the parallel market, the same level it closed at last week. But the naira currency appreciated marginally to 196.98 to the dollar on the official interbank market, compared to 197 to the dollar last week.
The exchange rate of the naira is pegged at the official window in the wake of falling global oil price to preserve Africa’s top economy forex reserves. (Reporting by Matthew Mpoke Bigg, Drazen Jorgic, Fumbuka Ng‘wanakilala and Elias Biryabarema, Chris Mfula, and Oludare Mayowa; Compiled by Nqobile Dludla; Editing by Raissa Kasolowsky)