African currencies week ahead: Kenya shilling to gain, Zambia kwacha to ease

NAIROBI: Kenya’s shilling is expected to gain against the dollar in the next week to Thursday, while Tanzanian, Ugandan and Nigerian currencies are seen holding steady, traders said.

KENYA — The Kenyan shilling is expected to rally, buoyed by higher dollar inflows from offshore investors into the local debt market and improved risk sentiment for so-called frontier assets.

At 0700 GMT, commercial banks posted the shilling stronger at 109.75/95 versus 110/110.20 last Thursday. Traders said a Treasury bond auction had been met by high demand from foreign investors.

“It will relieve some of the pressure on the currency for the time being,” said a senior trader at a commercial bank, adding that a planned US economic stimulus package was boosting appetite for emerging-market assets.

TANZANIA — Tanzania’s shilling is expected to hold steady as dollar inflows from the mining sector balance demand from the energy and manufacturing sectors.

Commercial banks quoted the shilling at 2,314/2,324 against the dollar, the same as last Thursday’s close.

UGANDA — The Ugandan shilling is seen trading in a stable range in the coming days as easing political risks following last week’s elections support positive market sentiment.

Commercial banks quoted the shilling at 3,680/3,690, compared with last Wednesday’s close of 3,705/3,715.

Markets were closed on Thursday last week for a holiday in Uganda.

ZAMBIA — The kwacha is expected to remain under pressure against the dollar as demand for the hard currency continues to outweigh supply.

On Thursday, commercial banks quoted the currency of Africa’s second-largest copper producer at 21.3300 per dollar from a close of 21.2750 a week ago.

“It is likely to continue trading on the back foot in the absence of any significant hard currency inflows,” one commercial bank trader said.

NIGERIA — The naira is seen flat in the coming week as traders watch for policy details at the central bank’s first rate-setting meeting of the year. The naira opened at 394.16 on the over-the-counter spot market on Thursday, compared with 475 naira on the black market. The naira is quoted at 381 to the dollar on the official market, a level set in July and backed by the central bank.