Naira to weaken ahead of budget signing

The naira is expected to weaken more on the parallel market but flat on the official interbank market next week as businesses await the signing of the 2016 budget by President Mohammadu Buhari.

The local currency closed at 320 against the dollar on the parallel market on Thursday, while it traded at  197 to the greenback on the interbank market.

“There is presently a lull in the forex market because of the non-release of the 2016 budget by the government, but we see  transactions picking up as soon as the government reveals its economic direction through the budget next week,” one currency trader told Reuters.

Analyst and the Chief Executive Officer, Cowry Asset Management Limited, Mr. Johnson Chukwu, said although investors and other stakeholders were waiting for Buhari’s final assent to the budget, weak consumer confidence would continue to keep the naira at the current level in the near future.

Meanwhile, the Kenyan, Ghanaian and Zambian currencies are expected to gain ground next week with the cedi recording its first year-to-date gain in recent years after weeks of consistent rally on renewed investor confidence underpinned by improved foreign exchange inflows, according to analysts.

Commercial banks quoted the cedi at 3.8290 to the dollar on Thursday, compared to 3.8350 last week, Reuters reported.

The Ghanaian government had on Monday appointed Abdul-Nashiru Issahaku as the governor of the central bank, promoting him from the deputy position to replace Henry Kofi Wampah, who retired at the end of March, four months earlier than expected.

The Kenya’s shilling is seen firming after weakening on news that the central bank said it had placed Chase Bank under receivership for 12 months to protect depositors, creditors and the public.

“We expect the shilling to regain its lost ground in the coming days as the Chase Bank issue dies out,” a senior trader at one commercial bank said.

The kwacha is expected to remain firm versus the dollar next week due to increased dollar supply from investors attracted to high-yielding government bonds.

On Thursday, commercial banks quoted the currency of Africa’s second-biggest copper producer at 10.2829 per dollar, up from a close of 11.1000 a week ago.

 “Stakeholders seek to take advantage of the high investment rates,” the local branch of South Africa’s First National Bank said, predicting a break of the 10.000 psychological level.