Uganda Shilling to Weaken, Other African Currencies Stable: Forex Outlook
African currencies are presenting a mixed outlook as the week progresses, with the Ugandan shilling expected to weaken while others hold steady or show modest strength. Divergent economic factors, including import demand, central bank intervention, and commodity export revenues, are driving these varied performances.
Uganda: Shilling Set to Decline Amidst Dividend Demand
The Ugandan shilling is forecast to depreciate against the US dollar. Currency traders cite increased demand for dollars from foreign companies looking to remit dividends as the primary driver. As of today, , commercial banks are quoting the shilling at 3,595/3,605 to the dollar, a slight decrease from last Thursday’s close of 3,585/3,595.
“It’s the period where foreign-owned companies are remitting last year’s dividends… some demand is for that purpose,” one currency trader explained. The trader anticipates the local currency will trade between 3,580 and 3,620 against the dollar in the coming week.
Nigeria: Naira Stability Supported by Central Bank
The Nigerian naira is expected to remain stable, bolstered by ongoing interventions from the Central Bank of Nigeria. On , the official exchange rate stood at 1,354 naira per US dollar, slightly stronger than the 1,357 recorded a week earlier. The naira continues to trade at 1,365 per dollar on the parallel market.
“I expect the market to remain stable around 1,350 to 1,360 naira next week,” a trader stated. “I think that range should be comfortable for the coming week. The central bank has intervened on both sides of the market… over the last one to two weeks.”
Ghana: Cedi Holds Steady on Moderate Demand and Mining Inflows
The Ghanaian cedi is projected to maintain a stable range, supported by moderate dollar demand from businesses and consistent foreign exchange auctions conducted by the Bank of Ghana. As of today, the cedi is trading at 10.60 to the dollar, a strengthening from 10.99 a week ago, according to LSEG data.
Ronald Mensah, a currency trader at Stanbic Bank Ghana, noted that “dollar demand from corporates has remained subdued, while increased forex inflows from the mining sector and sustained central bank intervention via its foreign exchange auction have bolstered supply in the short term.” He added, “We believe this constructive dynamic should persist in the near sessions, supported by balanced flows and continued policy support.”
Andrews Akoto, head of trading at Absa Bank Ghana, further explained that demand for foreign currency from the energy and commerce sectors has eased, while inflows from the mining industry remain robust and interbank liquidity has improved.
Kenya: Shilling Forecast to Remain Stable
The Kenyan shilling is expected to hold steady, with market forces currently balanced. Commercial banks are quoting the shilling at 128.80/129.10 to the dollar, unchanged from last .
“Supply and demand are balanced, so there’s no pressure from either side,” a trader commented.
Zambia: Kwacha Maintains Strength on Copper Export Revenue
The Zambian kwacha is anticipated to remain around its current levels, continuing a strong performance this year driven by robust copper export earnings. Commercial banks are pricing the currency, the currency of Africa’s second-largest copper producer, at 18.99 to the dollar, down from 19.08 a week earlier.
Access Bank highlighted that copper export receipts remain the primary driver of foreign currency supply. This sustained inflow of dollars from the mining sector is providing significant support to the kwacha, reinforcing its position as one of the stronger currencies in the region.
The overall picture across African currencies remains one of divergence, reflecting the unique economic circumstances of each nation. While some, like Uganda, face pressures from external factors, others, such as Zambia, are benefiting from favorable commodity prices and proactive central bank policies. The coming week will be closely watched by investors and traders seeking to understand the evolving dynamics of the African foreign exchange market.