- African FX Pressure Returns as Cedi and Ugandan Shilling Weaken on Dollar Demand
Foreign-exchange pressure is rebuilding across parts of Africa, with Ghana’s cedi and Uganda’s shilling weakening against the dollar as import demand, portfolio-related outflows and energy-sector requirements test local currency markets.
The Ghanaian cedi traded around GH¢11.30 to the dollar on September 3, compared with about GH¢11.20 a week earlier, representing a weekly depreciation of approximately 0.89%. Dealers cited strong corporate demand for dollars to finance imports as well as foreign-investor demand to repatriate coupon payments, while Bank of Ghana foreign-exchange auctions continued to attract strong interest.
The move is modest in percentage terms, but the underlying market signal is more consequential. Ghana’s recent currency stability has not eliminated structural demand for foreign exchange, meaning the balance between commercial demand and the supply of dollars from exports, official intervention and other inflows remains critical.
Reuters said dealers expected the cedi to remain under pressure in the coming week. That does not necessarily imply a sharp depreciation, but it suggests that market liquidity could tighten further if dollar supply fails to keep pace with corporate and portfolio-related demand.
The distinction matters because exchange-rate stability depends not only on the headline spot rate but on the depth of the underlying market. A currency can appear broadly stable while businesses continue to compete aggressively for limited foreign-exchange liquidity.
For Ghana, sustained demand from importers remains particularly important because a weaker cedi can quickly feed into the local cost of fuel, machinery, pharmaceuticals, food and other imported goods. Portfolio repatriation creates an additional source of pressure when foreign investors convert cedi-denominated income into dollars.
The Bank of Ghana’s interventions can smooth short-term volatility and improve market liquidity, but persistent reliance on official dollar supply would not by itself resolve the underlying imbalance. Durable currency stability ultimately requires sufficiently strong export earnings, capital inflows and confidence in domestic financial assets.
Uganda is experiencing a similar pattern, although the principal source of pressure is different.
The Ugandan shilling weakened to around UGX3,780–3,790 per dollar, from UGX3,750–3,760 the previous week. Using midpoint rates, that represents depreciation of approximately 0.80%, with dealers attributing much of the move to strong dollar demand from energy importers amid volatility in global energy markets.
Energy-importing economies are particularly vulnerable when global oil and fuel costs rise because domestic firms must purchase more dollars to settle external obligations. That can place additional pressure on local currencies even where broader macroeconomic conditions remain relatively stable.
Reuters said the Ugandan currency was also expected to weaken further in the near term, making the shilling one of the more closely watched African currencies alongside the cedi this week.
Zambia’s kwacha also recorded a notable move, trading at approximately ZMW19.37 per dollar, compared with ZMW19.18 a week earlier. That translates into a depreciation of roughly 0.99%, although dealers expect near-term stability to be supported by strong copper prices and subdued speculative activity.
The copper factor is important for Zambia because stronger commodity prices can improve foreign-exchange inflows and offset part of the dollar demand generated by imports and external payments. That provides the kwacha with a potentially stronger external buffer than currencies in economies without a comparable commodity export windfall.
Kenya, by contrast, continues to show exceptional stability.
The Kenyan shilling remained around KES129.35–129.55 per dollar, virtually unchanged from the previous week, with dealers expecting little immediate movement. The absence of material depreciation distinguishes Kenya from Ghana, Uganda and Zambia in the current regional snapshot.
Nigeria provides an even sharper contrast.
The naira appreciated to approximately NGN1,315 per dollar in the official market on September 3, its strongest level in roughly two years, according to TheCable. The improvement extends a period in which Nigeria’s currency has benefited from stronger foreign-exchange conditions and improving external buffers.
That makes Nigeria the clearest regional outperformer among the major currencies in this week’s comparison.
The divergence across African currencies illustrates why exchange-rate movements cannot be understood through a single continental narrative. Ghana is being tested by corporate import demand and portfolio repatriation, Uganda by energy-sector dollar requirements, Zambia by a balance between depreciation pressure and strong copper receipts, while Kenya remains stable and Nigeria continues to appreciate.
For Ghana, the most important signal is therefore not the 0.89% weekly depreciation alone.
It is the combination of corporate dollar demand, investor outflows and strong participation in central-bank FX auctions, all of which suggest that underlying demand remains elevated even after the cedi’s recent period of stability.
If export-sector and official dollar supply remain adequate, the pressure may be contained. If not, the market could face another period of tightening liquidity and renewed exchange-rate volatility.
The immediate regional picture is therefore increasingly divided: Ghana and Uganda are facing renewed dollar pressure, Zambia is weakening but supported by copper, Kenya remains steady, and Nigeria’s naira is moving in the opposite direction.
