"Cedi to further weaken as dollar demand persists"

" \n Cedi to further weaken as dollar demand persists \n \n\n \n The Cedi depreciated against the dollar this week, sliding to 6.04 from 6.02 at last week\u2019s close, with dollar demand continuing to outweigh supply as economic activity increases in the country. \n \n\n \n A $75m FX auction last week gave the local currency a temporary reprieve before increased dollar demand resumed the pressure. We expect those market dynamics to persist and the Cedi to remain strained in the coming days. \n \n\n \n Angola earns rating uplift as economy poised to end five years of contraction \n \n\n \n Angola this week saw Moody\u2019s raise its credit rating one level to B3 from Caa1, six places below investment grade, supported by the country\u2019s improved fiscal position and rising oil prices. It was the first time Moody\u2019s has upgraded Angola since first rating the country in 2015, reversing the one-notch downgrade last September to Caa1. \n \n\n \n Back in January, Angola secured three years of debt relief from China\u2014which accounts for almost half of the African nation\u2019s external borrowing\u2014before the IMF in June approved $722m in additional financing through its Extended Fund Facility programme. The IMF forecasts that Angola\u2019s economy will expand this year for the first time since 2015. \n \n\n \n Pressure on record-low Naira to continue \n \n\n \n The Naira weakened to a fresh low against the dollar, trading at 557 on the unofficial market compared to 540 at last week\u2019s close. The continued stress comes as increased demand for the greenback collides with low supply, exacerbated by the Central Bank of Nigeria suspending the sale of dollars to the country\u2019s bureau de change operators. The CBN has tried to counter this with increased FX sales to domestic banks, though it has not been adequate to meet demand. \n \n\n \n Meanwhile, currency speculators have been taking advantage of the disparity between the official NAFEX window rate\u2014currently trading at about 411\u2014and the parallel market. We expect the Naira to remain under pressure in the coming days with the supply and demand mismatch unlikely to change. \n \n\n \n Business confidence data to drive Rand outlook \n \n\n \n The Rand weakened against the dollar this week, declining to 14.39 from 14.20 at last week\u2019s close after data showed the country\u2019s retail sales fell in July, underpinning concerns that the recent domestic unrest and Covid-19 restrictions are likely to have impacted third-quarter growth. \n \n\n \n JPMorgan also warned that the currency remains prone to further weakness, in part because South Africa\u2019s key terms of trade are starting to look less favourable, adding to the downbeat sentiment over the past week. How traders continue to react to this week\u2019s business confidence numbers should dictate the Rand\u2019s direction over the coming seven days. \n \n\n \n Egyptian Pound to remain steady on export, investment inflows \n \n\n \n The Pound was stable against the dollar this week, trading flat at 15.68\/15.76, shrugging off news that inflation rose in August to 4.5% from 3.6% in July, according to Egypt\u2019s central bank. \n \n\n \n We expect the Pound to continue maintaining its current levels over the coming week, supported by inflows from rising exports\u2014including goods such as plastics and ready-made clothes\u2014and foreign investment into the country. \n \n\n \n Read: Small and Medium Forest Enterprises trained on harvesting requirements \n \n\n \n FX reserves to prop up Kenyan Shilling \n \n\n \n The Shilling was steady against the dollar this week, unchanged at 109.90\/110.10 as demand for the greenback was matched by FX inflows. The Shilling was also supported by the issuance last week of Kenya\u2019s infrastructure bond, which raised KES106.8bn. \n \n\n \n The Central Bank of Kenya said its foreign currency reserves increased to roughly $9.63bn in the week to September 9\u2014sufficient for 5.89 months of import cover\u2014from $8.88bn during the previous seven days. We expect those reserves to shield the Shilling against market pressure in the coming week. \n \n\n \n Dollar demand to maintain pressure on Ugandan Shilling \n \n\n \n The Shilling depreciated slightly this week to 3532 from 3528 at last week\u2019s close amid increased dollar demand from corporates. \n \n\n \n The Bank of Uganda\u2019s research director this week said the amount of money in circulation in the country had grown by just under UGX266bn between June and July, indicating an increase in economic activity. That will likely spur continued dollar demand and lead to a mild weakening of the Shilling over the next seven days. \n \n\n \n Tanzanian gold receipts to offset Covid impacts \n \n\n \n The Shilling was stable against the dollar this week, trading at 2314\/2324 as demand for the greenback was matched by supply. On Monday, the Tanzanian central bank\u2019s monetary policy committee agreed to the bank\u2019s proposal to maintain liquidity easing monetary policy over the next two months to support credit expansion to the private sector. \n \n\n \n Tanzania\u2019s statistics agency also reported that inflation was steady in August at 3.8%, unchanged from July. We expect the Shilling to remain stable this coming week as inflows from exports including gold and agricultural products, such as cotton, offset the economic impacts of Covid-19 and the reduction in tourism numbers. \n "

"Cedi to further weaken as dollar demand persists"

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