Cedi expected to remain under pressure amid strong FX demand - Report

The Ghana cedi is expected to remain under pressure against the US dollar in the coming week, driven by persistent foreign currency demand from corporate sectors, traders have said.

According to market data cited by Reuters, the local currency is likely to extend recent losses due to sustained dollar demand from import-dependent sectors.

LSEG data showed the cedi trading at 11.03 to the dollar on Thursday, compared with 11.01 a week earlier.

“Strong FX demand from the energy, commerce and manufacturing sectors is likely to spur a stronger dollar in the week ahead, as supply remains tight despite decent interbank turnover in recent sessions,” Andrews Akoto, head of trading at Absa Bank Ghana is quoted to have said.

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He added that bids at the latest central bank FX auction exceeded $401 million, while only $110 million was allocated, indicating a significant backlog of unmet demand in the market.

The report also noted that other African currencies showed mixed performance.

Kenya’s shilling is expected to remain stable, supported by easing foreign currency demand following a ceasefire between the United States and Iran, which has improved global market sentiment. The currency traded at 129.05/129.25 per dollar, slightly down from 129.10/129.40 a week earlier.

Uganda’s shilling is also projected to remain steady, supported by dollar inflows from coffee exports and reduced demand from energy importers.

Commercial banks quoted the currency at 3,695/3,705 to the dollar, compared to 3,687/3,697 previously.

“We have a bit of flows coming in from coffee while we’ve also seen demand pressure from energy importers slowing,” a trader said.

Meanwhile, Zambia’s kwacha, may also come under pressure in the coming week as copper prices remain volatile, affecting export earnings. The currency traded at 19.40 to the dollar, from 19.46 a week earlier.

“The notable recovery in global copper prices has helped to cushion the local currency, but the metal is likely to remain volatile over the near term,” Access Bank said in a note.

With additional files from Reuters

MA