Don't Miss


Home   >   Market - Finance   >   Currencies   >   Dollar sales to boost naira next week

Dollar sales to boost naira next week

By on September 5, 2014

The naira is seen range-bound next week, supported by dollar sales by the Nigerian National Petroleum Corporation and offshore investor flows into the local debt market.

The local currency has drifted in the N161.70-N162.55band since last week, according to Reuters.

“The naira should see some gains next week, but not far from the present range,” one dealer predicted.

Ghana’s cedi should also hold its ground as investor confidence rebounds before bailout talks with the International Monetary Fund next week.

Ghana is due to begin talks with the IMF in mid September for an assistance program aimed at shoring up its economy, which is beset with stubborn deficits and high inflation. The currency has slumped 39 per cent this year.

The cedi, which hit a record low of 3.9000 against the dollar in June, has clawed back in the last two weeks to trade at around 3.6400 on Thursday.

According to Reuters, rising importer demand is likely to weigh on East African currencies against the dollar next week, but tight monetary policy in Zambia is expected to prop up the kwacha.

Traders expected the Kenyan shilling to lose ground as increased money market liquidity fuels demand for dollars, although the central bank is likely to sell dollars to prop up the local currency.

By 1135 GMT on Thursday, commercial banks quoted the shilling at 88.60/65 to the dollar, weaker than last Thursday’s close of 88.35/45.

“More liquidity in the market points to a weaker shilling,” said a Commercial Bank of Africa trader, John Njenga, said.

After a brief liquidity crunch, the average overnight interbank lending rate fell to 8.2033 per cent on Wednesday from 13.8391 per cent on Aug 25.

Speculation in the market was that the Central Bank of Kenya would not allow the currency to weaken below 89 shillings/dollar, Njenga said.

The central bank pumped an unspecified amount of dollars into the market last month after the shilling fell to 88.80/90, its weakest since December 2011.

An expected surge in importer demand before the December shopping season could put pressure on the Ugandan shilling.

 

[Punch]