Naira, 3 Other African Currencies Tipped to Extend Gains Against US Dollar
- The naira traded at one of its strongest levels in two years and is expected to strengthen further
- The Nigerian currency was not alone, as other African currencies were also tipped for strong performance
- Various factors were highlighted as reasons the naira is expected to continue strengthening
Legit.ng journalist Dave Ibemere has over a decade of business journalism experience with in-depth knowledge of the Nigerian economy, stocks, and general market trends.
The naira is among African currencies expected to strengthen further against the US dollar in the days ahead.
In the last 10 trading days, the naira has appreciated by N52.75 against the US dollar from N1,418.95 on Monday, January, 26 to N1,366.19 on Friday, February 6.
Source: Getty Images
Naira is rising due to improved foreign exchange supply, strong oil receipts, and renewed inflows from foreign investors attracted by high yields on government debt have supported the naira.
On the parallel market also known as the black market it traded around N1,445 per dollar.
Traders said stronger demand at upcoming bond auctions could push the currency toward N1,350 per dollar.
Snapshot of naira exchange rate against other currencies
- CFA: N2.45
- Yuan/Renminbi: N196.88
- Danish Krona: N215.90
- Euro: N1,612.52
- Yen: N8.70
- Riyal: N364.28
- South African Rand: N84.76
- SDR: N1,878.11
- Swiss Franc: N1,756.71
- Pounds Sterling: N1,857.75
- US Dollar: N1,366.20
African currencies expected to rise except cedi
Another currencies expected to appreciate is Zambia’s kwacha to remain on the front foot, buoyed by improving macroeconomic conditions and resilient copper prices, the country’s key export.
Reuters reported on Thursday, February 5, that the currency traded at 19.09 per dollar, strengthening from 20.29 a week earlier.
Economist Kelvin Chisanga quoted said recent central bank measures restricting foreign-currency usage were adding further support.
Source: Getty Images
While currencies in Kenya and Uganda are likely to remain stable, according to traders.
Meanwhile, Ghana’s cedi may weaken further due to strong dollar demand from the energy sector.
The cedi was last quoted at 10.95 per dollar, slightly below 10.90 a week earlier, BusinessDay reports.
Analysts said unfilled demand at central bank FX auctions could keep the dollar strong against the cedi in the near term.
Data from LSEG indicated that the cedi traded at 10.95 per dollar, slightly lower than 10.90 a week ago.
Andrews Akoto, head of trading at Absa Bank Ghana, noted that the dollar could remain strong due to unmet demand at recent central bank FX auctions.
Another trader added that continued excess demand for dollars may push the cedi lower in the coming days.
Foreign reserves rise
Earlier, Legit.ng reported that Nigeria's foreign exchange (forex) reserves recorded an increase significantly boosting the Central Bank of Nigeria's fight to help naira recover its lost value.
The CBN reinstated its commitment to intervene in the foreign exchange markets to increase liquidity and ease demand pressure on naira.
Foreign reserves serve as a buffer to support the stability of the Nigerian currency in the international foreign exchange market.
Proofreading by Funmilayo Aremu, copy editor at Legit.ng.
Source: Legit.ng
