NAIROBI: Kenya's currency is likely to come under pressure in the coming week while Nigeria, Zambia, Uganda and Tanzania's are expected to trade sideways.
Kenya
Kenya's shilling is expected to weaken due to increased dollar demand from importers. Commercial banks quoted the shilling at 110.75/95 to the dollar, compared with last Thursday's close of 110.65/75.
"I think the pressure still remains. There's a lot of (dollar demand) backlog. Until that is sorted, we'll just see the pressure," a trader at one commercial bank said.
Nigeria
Nigeria's naira is seen flat in the coming week as traders weigh the vice president's comments this week urging the central bank to ensure naira's valuation reflects market reality.
The naira traded at 573 per dollar on the black market , last week's level, while it was quoted at 414 naira on the official market, broadly in a range held since June.
Vice President Yemi Osinbajo urged the central bank on Monday to rethink its demand management policy, which it has used to restrict imports in an attempt to manage pressure on the currency.
Nigeria has several exchange rates operating in parallel, a system put in place during a 2016 oil price crash because the government was seeking to avoid a large official devaluation of the naira as a matter of national pride.
Kenyan shilling seen hurt by strong dollar appetite
Zambia
The kwacha will likely hold steady next week due to support from the central bank even as demand for hard currency, mainly driven by agricultural imports, outweighs supply.
On Thursday, commercial banks quoted the currency of Africa's second-largest copper producer at 16.8750 per dollar from 17.0266 at the close of business a week ago.
"We see the kwacha trading stable given heightened FX liquidity injections from BoZ (Bank of Zambia) in recent weeks," Zambia National Commercial Bank (ZANACO) said in a note.
Uganda
The Ugandan shilling is expected to be steady after the central bank held its benchmark lending rate, citing economic risks from the COVID-19 pandemic.
Commercial banks quoted the shilling at 3,605/3,615, compared with last Thursday's close of 3,560/3,570.
"In the wake of the neutral stance I think we'll probably see the shilling swing slightly both ways ... ultimately it's likely to be a stable market," said an independent foreign exchange trader.
On Thursday the central bank kept its benchmark lending rate at 6.5%.
Tanzania
Tanzania's shilling is expected to hold steady as dollar inflows from agricultural exports help to cushion demand for the greenback.
Commercial banks quoted the shilling at 2,300/2,310 per dollar, unchanged from last Thursday's close.
"We expect the shilling to gain support in the near term from investor inflows and agricultural exports, notably coffee," a trader at one foreign exchange trading company said.
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