Kenyan currency seen firming, Zambia, Uganda's to soften

NAIROBI: Kenya's currency is likely to firm against the US dollar next week as Zambia's and Uganda's soften. Nigeria and Tanzania's currencies are seen holding steady.

KENYA

The Kenyan shilling is expected to edge up against the dollar next week, driven by dollar inflows from offshore investors into local government bonds.

The shilling has been stuck at 109.55/75 per dollar in recent days due to lack of demand for hard currency, traders said, adding that the range could move up to 109.00-109.50 next week.

ZAMBIA

The kwacha will likely continue trading under pressure against the dollar next week due to sustained demand for hard currency and scanty inflows.

On Thursday, commercial banks quoted the currency of Africa's second largest copper producer at 21.9400 per dollar from a close of 21.9000 a week ago.

"The local unit is expected to remain bearish with demand for the hard currency expected to persist amid erratic dollar inflows," Zambia National Commercial Bank (ZANACO) said in a note.

UGANDA

The Ugandan shilling is seen weakening in the next few days under the shadow of trade disputes with Kenya.

At 0904 GMT, commercial banks quoted the shilling at 3,660/3,670 against the dollar, compared with last Thursday's close of 3,655/3,665.

Kenya has banned imports of Ugandan maize after imposing restrictions on shipments of other Ugandan exports including milk and poultry products.

"I think we might start to see some players moving aggressively on the demand side because export restrictions are expected to hit Uganda's forex earnings," an independent foreign exchange trader in Kampala said.

NIGERIA

The naira is seen range-bound next week, supported by a central bank incentive to try to attract more diaspora inflows through official channels to shore up the currency on the black market, traders said.

The currency was quoted at 484 naira on the black market on Thursday, weaker than 480 naira last week. It traded at 408.32 naira on the spot market but remained flat on the official market backed by the central bank at 381 naira since last July.

The central bank last week said recipients of remittances from the Nigerian diaspora through international money transfer operators licensed by the regulator will receive 5 naira for every dollar imported.

TANZANIA

Tanzania's shilling is expected to hold steady next week, underpinned by the low inflation rate and inflows from foreign investment.

Commercial banks quoted the shilling at 2,314/2,324 against the dollar on Thursday, unchanged from last week's close.

"We foresee a stable shilling in the coming week, helped by the slower rate of inflation and the 25-year bond attracting foreign investors and (hard) currency inflows," Terry Karanja, a treasury associate at AZA, a Nairobi-based FX trading firm, said.