Kenya's and Uganda's shillings are likely to strengthen next week due to waning demand for dollars as the year comes to a close. The Ugandan shilling may also be helped by foreign currency inflows from the diaspora.
UGANDA Uganda's shilling will trade rangebound but could strengthen due to muted dollar demand ahead of the holidays and inflows from Ugandans living abroad, traders said. The Bank of Uganda (BoU) yesterday held a 95 billion shillings ($39.8 million) Treasury bill auction, which was oversubscribed. "It would trade between 2,350 and 2,400 through next Thursday.
KENYA Kenya's shilling is seen firming in the coming days helped by reduced dollar demand ahead of the holidays and the central bank mopping up shillings through repurchase agreements. The shilling is 20 percent off its all-time low of 107 hit in October after the central bank adopted a monetary tightening stance. Since October 5, the central bank rate has been raised by 11 percentage points to 18 percent.
Traders said the shilling could break the psychological level of 85 by the end of the year since demand for dollars had fallen as importers close for the holidays. They said implementation of a higher cash reserve ratio (CRR) directive by the central bank was going to support the shilling further.
TANZANIA Tanzania's shilling is seen firming, helped by dollar inflows from firms selling the US currency to pay their shilling-denominated taxes at the close of the year. Commercial banks in Dar es Salaam quoted the shilling at 1,585/1,595 against the dollar, stronger than last Thursday's close of 1,615/1,625. Traders said they expect the shilling to trade in the 1,570-1,580 range in the coming days due to muted dollar demand.
NIGERIA Nigeria's naira is seen weakening slightly against the dollar next week if the central bank closes its bi-weekly foreign exchange auction window for the year. The central bank usually closes its official window for the year ahead of Christmas in order to tidy up its books.
Traders said the local unit of Chevron sold about $19 million to some lenders on Thursday, while more energy firms are still expected to come to the market with their month-end dollar sales, which should provide some support for the naira. The naira has fluctuated around 161.70-162.80 to the dollar due to inflows from some energy companies and regular direct dollar sales by the central bank to some banks.
GHANA Ghana's cedi is expected to hold on to its gains against the dollar next week as long as the central bank supplies the market with dollars, traders said. Christopher Nettey quoted the interbank cedi-dollar exchange rate at 1.6375/00 on Thursday, slightly down from an open of 1.6370/95.
Comments
Comments are closed for this article.