Markets

Kenyan, Ugandan and Zambian currencies seen under pressure

  • The Kenyan shilling will be under pressure in the coming week, as companies are getting ready for their end of month obligations amid projected lower economic growth.
  • The Uganda shilling is seen trading on a weak footing against the dollar in coming days as traders start to rebuild oversold positions, traders said.
Published May 20, 2021

NAIROBI: Kenyan, Ugandan and Zambian currencies are likely to trade on the back foot against the US dollar next week as Nigeria and Tanzania's hold steady.

KENYA

The Kenyan shilling will be under pressure in the coming week, as companies are getting ready for their end of month obligations amid projected lower economic growth.

At 0824 GMT on Thursday, traders quoted the shilling at 108.00/108.20 compared with last week's close of 107.00/107.20.

"As end of month demand kicks in, we anticipate the shilling will come under pressure," said one trader at a commercial bank in Nairobi.

"This is just a reflection of risk sentiment after the International Monetary Fund revised Kenya's growth prospects from 7.6% to 6.3% for 2021," another trader said.

The IMF and Kenyan authorities reached a staff-level agreement on economic policies to conclude the first review of its 38-month extended fund facility and extended credit facility financed programme, the IMF said on Monday.

UGANDA

The Uganda shilling is seen trading on a weak footing against the dollar in coming days as traders start to rebuild oversold positions, traders said.

At 1001 GMT commercial banks quoted the shilling at 3,560/3,570, compared to last Friday's close of 3,530/3,540.

"I think the local currency hit its resistance level around 3,520...I anticipate some players will be active on the demand side to beef up their positions," said a trader at one commercial bank.

He said the shilling could weaken to touch 3,600 in the comings days.

ZAMBIA

The kwacha is likely to continue depreciating against the dollar in the coming week, albeit at a slower pace as demand for hard currency continues to outweigh supply.

On Thursday, commercial banks quoted the currency of Africa's second largest copper producer at 22.4500 per dollar from 22.3850 at the close of business last Thursday.

"Interim trends suggest that the local unit will likely trade between 22.4500 and 22.8000 in the short to medium term," pan-African commercial bank, Access Bank said in a note.

Zambia's central bank sold $259.7 million in the first quarter of this year to moderate exchange rate pressure, governor, Christopher Mvunga said in a statement on Wednesday.

NIGERIA

Nigeria's currency is seen closing range-bound within 408 naira to 412 naira per dollar next week, despite recent weakness on the official market as the country attempts to unify its multiple spot exchange rates, traders said.

The unit traded at 412 naira per dollar on Thursday on the official market after slipping to a record low of 425.90 naira the previous session.

"Offshore counterparties are trading between 420 naira to 430 naira. Though the central bank is intervening at 410 levels," one trader said.

The naira was quoted at 485 per dollar on the black market on Thursday, a level it touched two weeks ago.

TANZANIA

Tanzania's shilling is expected to hold steady next week as supply and demand for dollars across sectors stays evenly matched.

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

"We foresee a stable shilling in the coming week supported by matched dollar supply and demand from the manufacturing and energy sectors," said Terry Karanja, a treasury associate from Nairobi-based foreign exchange firm AZA.

Comments

Comments are closed.