Kenyan, Nigerian and Ugandan currencies seen under pressure

NAIROBI: Kenyan, Nigerian and Ugandan currencies are likely to come under pressure versus the US dollar next week as Zambia's and Tanzania's hold steady.

Kenya

The Kenyan shilling is expected to weaken against the dollar, pressured by demand from importers, dividend payments and purchases of assets abroad, traders said.

Commercial banks posted the shilling at 109.95/110.15 per dollar on Thursday compared with 110 a week earlier.

"There is still a lot of demand that needs to come through and so it will remain under pressure for a week or so. The demand comes from dividend payments, purchases of assets abroad. There is one bank that has purchased another bank in Rwanda and all that requires dollar payment," said a senior currency trader at a commercial bank.

Kenya's shilling to strengthen, Tanzania's to hold steady

Nigeria

Nigeria's naira is seen as easing next week after it hit a new lows on the black market this week due to chronic dollar scarcity, traders said.

The naira dropped 0.53% on Thursday to a new low of 565 to the dollar on the black market. The naira has been hitting new lows since July.

The central bank is due to set benchmark interest rates on Friday, with currency policy in focus, analysts say.

The currency was quoted at 411.30 naira on the official market, around the range it has been trading within since June.

Uganda

The Ugandan shilling is seen trading with a moderate bias on the weaker side, with some demand expected from importers in the energy sector.

At 0859 GMT commercial banks quoted the shilling at 3,525/3,535, compared with last Thursday's close of 3,520/3,520.

"There's been some interest on the demand side from energy sector which could give the local unit a small weakening bias," said a trader at one commercial bank.

The shilling, he said, will likely oscillate between 3,520 and 3,550.

Zambia

The kwacha is likely to remain largely stable on improving investor sentiment following the election of a new president seen as market friendly.

On Thursday, commercial banks quoted the currency of Africa's second-largest copper producer at 16.3400 per dollar from a close of 16.1800 a week ago.

Zambia's new president, Hakainde Hichilema, defeated incumbent Edgar Lungu in elections held on Aug. 12 and has publicly backed an IMF-led economic reform programme.

"With the elections now over, we expect discussions with the IMF to proceed and result in an agreement on a financial programme over the next few months," Fitch said in a fourth quarter report.

Tanzania

Tanzania's shilling is expected to hold steady next week with great support of inflows from minerals and agricultural exports.

Commercial banks quoted the shilling at an average of 2,314/2,324 against the US dollar, the same levels recorded a week earlier.

"We expect the shilling to remain stable this coming week as inflows from exports including gold and agricultural products, such as cotton, offset the economic impacts of Covid-19 and the reduction in tourism numbers," said Terry Karanja, a treasury associate at AZA, a Nairobi-based FX trading firm.