Naira to plunge further on high dollar demand
The naira is expected to plunge further against the United States dollar next week as dollar shortage intensifies; following the banning of nine Deposit Money Banks from the foreign exchange market by the Central Bank of Nigeria.
The CBN had, on Tuesday, banned nine banks from the forex market over their failure to remit the Nigerian National Petroleum Corporation’s $2.334bn to the Federal Government’s Treasury Single Account.
On Friday, the naira plunged to 412 against the dollar at the parallel market, down from 409 on Thursday.
Traders said even though the CBN continued to sell dollars daily on the interbank market, its efforts were considered weak and inadequate, Reuters reported.
At the interbank market, the local currency closed at 316.84 to the dollar on Thursday, slightly lower than the level it closed last Thursday.
Kenya’s and Uganda’s shillings are also seen easing next week due to importer dollar demand from energy companies, while the Zambian kwacha is seen firming, according to traders.
At 1010 GMT, commercial banks quoted the shilling at 101.30/50 to the dollar, compared with last Thursday’s close of 101.45/55.
“Because this is going to be the end-of-month week, I still believe there will be a good amount of (dollar) demand in the market. I have a lot of oil clients, a lot of general retail importers,” a trader at one commercial bank said.
Traders said they were also on the lookout for the central bank selling dollars. It did so on Thursday after the shilling weakened in reaction to an amended law that caps commercial lending rates.
The Ugandan shilling is seen shedding value as corporates in the energy sector and other import businesses display their typical end of month demand for hard currency.
At 0941 GMT, commercial banks quoted the shilling at 3,370/3,380, weaker than last Thursday’s close of 3,365/3,375.
“Typically we see a jump in (dollar) demand from fuel importers and some manufacturers … this will play out in the coming days,” said a trader at a leading commercial bank.
The kwacha is next week likely to remain firm supported by a government bond auction settlement on Monday and an anticipated inflow of hard currency to pay salaries and other month- end obligations.
At 1020 GMT on Thursday, the currency of Africa’s second-biggest copper producer was quoted at 10.0000 per dollar from 9.9121 a week ago, Reuters reported.
“Government bond settlement takes place on Monday and we could see dollar conversions from last-minute foreign investors. This together with corporate conversions as we draw closer to month end, could see the local unit hold ground,” the Zambian branch of South Africa’s First National Bank said.
The Tanzanian shilling is expected to trade in a tight band as dollar demand from importers is offset by central bank support.
Commercial banks quoted the shilling at 2,182/2,192 to the dollar on Thursday, barely moved from 2,181/2,191 a week ago.
“The shilling has been stable over the past two weeks. We expect stability in the market to continue, with demand and supply being fairly matched,” a trader at CRDB Bank, Moses Kawiche, said.
Ghana’s cedi is seen firm next week on improving forex inflows as offshore investors sell dollars to mobilise funds to buy domestic bonds.
The local unit was quoted at 3.9535 to the greenback at 1030 GMT on Thursday, down 3 per cent since January, according to Reuters data.
“The government has reopened a five-year (domestic) bond that is maturing on July 2021 and it is likely to lead to some forex inflows… I expect the cedi to regroup to the 3.9400-3.9550 range,” a Barclays Bank Ghana currency dealer, Jacob Brobbey, said.http://newsstandard.ng/naira-to-plunge-further-on-high-dollar-demand/http://newsstandard.ng/wp-content/uploads/2016/08/Merits-and-demerits-of-student-bank-account.jpghttp://newsstandard.ng/wp-content/uploads/2016/08/Merits-and-demerits-of-student-bank-account-150x150.jpgBusinessCBN,Dollar,NairaThe naira is expected to plunge further against the United States dollar next week as dollar shortage intensifies; following the banning of nine Deposit Money Banks from the foreign exchange market by the Central Bank of Nigeria. The CBN had, on Tuesday, banned nine banks from the forex market over...Jasper Atakefa firstname.lastname@example.orgAdministratorNews Standard