Naira faces further pressure against dollar

The naira is seen weakening further against the United States dollar next week amid a crackdown in the parallel market currency traders and the persistent scarcity of the greenback.

Reuters reported that foreign exchange demand by small businesses was set to surge ahead of holiday season sales.

The local currency fell 2.08 per cent week-on-week on Thursday to 480 to the dollar on the parallel market against 470 a dollar last week, while it was quoted by commercial lenders at 314.80 a dollar on the interbank market.

The naira has, however, consistently closed around 305.5 a dollar level since August via the official window.

“The consistent clampdown on black market operators by security agents has driven some currency retailers underground, putting more pressure on available hard currency,” one dealer said.

But the Kenyan shilling could strengthen against the dollar in the coming week due to subdued importer demand and increased inflows from overseas remittances, traders said.

At 0742 GMT, commercial banks quoted the shilling at 101.80/102.00 to the dollar, the same as last Thursday’s close.

“From the data we’ve seen in the past, we normally tend to see an uptick in the Diaspora inflows during this month of December,” said a trader at a commercial bank.

Ghana’s cedi is expected to regroup in coming weeks on improved forex inflows as the central bank launches a $40m fortnightly interbank auction, traders say.

The cedi has been fairly stable this year but began sliding last month on a seasonal surge in end-of-year import demand and election-year shocks. It was trading at 4.3000 to the dollar at 1020 GMT on Thursday, compared with 4.1000 a week ago.

“We see the local unit potentially taking back some gains should the regulator keep the amount offered at $40m in the upcoming fortnightly auctions,” a Barclays Bank Ghana analyst, Andrews Akoto, said.

Culled from Punch