Five African Currencies Resist Rise of US Dollar

The currencies of five African countries are heading towards stability and strengthening in value against the US dollar, supported by government interventions, foreign dollar flows, and market demand.

A report issued by the American network CNBC shed light on the performance of five African currencies, namely the Kenyan shilling, Ghanaian cedi, Nigerian naira, Zambian kwacha, and Ugandan shilling, explaining the factors that affect the movements of these currencies.

In Kenya, the Kenyan shilling is expected to strengthen thanks to remittances and dollar flows directed to purchase government bonds. Kenyan traders also expect the shilling to strengthen further against the dollar after the government announced its plans to raise at least 50 billion shillings, equivalent to ($379.8 million), in banknotes. Tax-free financial aid in the middle of this month.

This move is likely to attract the interest of foreign investors and strengthen the currency, as the interest rate on 6.5-year bonds is 17.9327%, and 14.399% for 17-year bonds.

Regarding Ghana, the Ghanaian cedi is likely to stabilize at 15.54 to the dollar; The currency is expected to stabilize thanks to the balance of demand and supply in the interbank exchange market, although upcoming payments on restructured bonds may pressure it.

According to the report, the Nigerian naira is expected to remain stable against the dollar after the central bank intervened to relieve pressure on the market amid the ongoing protests in the country. The Central Bank of Nigeria sold $876.3 million to 26 banks, which helped boost it, and it is currently trading at 1,580 naira to the dollar in the official market.

The report added that the Zambian kwacha may achieve slight gains as a result of improved dollar flows and a decline in demand for hard currency, as the kwacha is trading at 26.05 to the dollar.

As for Uganda, the shilling may witness a slight weakness after the central bank reduced interest rates, as the shilling was trading at 3,725/3,735 to the dollar, and this decision is likely to affect the value of the currency, although no major changes in its value are expected.