According to them, the naira will likely strengthen against the dollar in the coming days as more offshore investors buy up local stocks after MSCI increased the country’s weighting in its frontier market index.
“We are beginning to see some international investors returning to the (stock) market,” a research analyst, Olabisi Ayodeji, told Reuters.
Traders said the re-emergence of offshore interest in the stock market had boosted dollar inflows to the economy, leading to a gradual exchange rate convergence.
The naira was quoted at 365 to the dollar on the black market on Thursday, against 368 per dollar last week. It is trading at around 305.70 to the dollar on the official interbank window.
Meanwhile, the Kenyan shilling is expected to trade in a tight range in the coming week due to demand from multinational companies buying shillings to meet their tax obligations, as well as low oil prices reducing the import bill, according to traders.
At 1101 GMT, commercial banks quoted the shilling at 103.45/65 per dollar, compared with 103.24/45 at last Thursday’s close.
“We’ve seen oil prices go down to 45 dollars per barrel so we don’t expect any un-warranted demand,” said a trader from a commercial bank.
The Ugandan shilling is seen trading in a stable range as the central bank curbs liquidity in the market, making it slightly more expensive to buy dollars.
At 0953 GMT, commercial banks quoted the shilling at 3,583/3,593, little changed from last Thursday’s close of 3,585/3,585.
“We’ll probably see the shilling play stable … in range of 3,575-3,600,” said a trader at a leading commercial bank, adding the excess liquidity removal will keep dollar demand subdued.
The Tanzanian shilling is expected to trade in a tight range in the coming days, mainly due to a general slowdown in business activity.
Commercial banks quoted the shilling at 2,234/2,244 to the dollar on Thursday, barely moved from 2,235/2,245 a week ago.
“We expect stable prices next week due to subdued demand for dollars and a slowdown in inflows of hard currency in the market,” said a trader at CRDB Bank.
Ghana’s cedi is expected to be stable in the week ahead as firms due to a healthy supply of dollars from firms and the central bank, according to traders.
The unit was trading at 4.4085 per dollar by mid-morning on Thursday, compared with 4.4200 a week ago.
An analyst at Accra-based Dortis Research, Joseph Biggles Amponsah, said the cedi could also be supported by falling inflation and short-term lending rates.
The Zambian kwacha is expected to remain firm against the dollar next week as firms sell dollars to pay their workers and suppliers at the end of the month.
At 1007 GMT, commercial banks quoted the currency of Africa’s second biggest copper producer at 9.1800 per dollar from a close of 9.2500 a week ago.