NAIROBI: Kenya's currency is likely to come under pressure next week as Zambia's holds firm and those of Nigeria, Tanzania and Uganda trade flat.
The Kenyan shilling is seen under pressure in the coming week due to end of month US dollar demand from the energy and manufacturing sector amid excess liquidity in the local money market, traders said.
Commercial banks quoted the shilling at 102.20/40 per dollar, compared with 101.75/95 at last Thursday's close.
"There is demand on the dollar front, this is mostly fed by the level of liquidity in the money market and end of month demand," said a senior trader from one commercial bank.
The kwacha is likely to hold firm against the US dollar next week owing to tight local currency liquidity and increased hard currency inflows.
On Thursday, commercial banks quoted the currency of Africa's second-largest copper producer at 12.8150 per dollar from a close of 12.7900 a week ago.
"We expect the local unit to gain ground against the greenback as sentiments and flows continue to skew the market towards kwacha strength," the local branch of South Africa's First National Bank (FNB) said in a note.
The naira is seen stable next week and could likely firm slightly, assuming the central bank offers to sell open market securities to lure offshore funds back to the currency market, traders said.
The naira eased as low as 361.50 per dollar this week from 360.30 a week earlier. It was quoted at 361 on exchange bureaus and at 306.90 on the official market, thanks to central bank support. Nigeria operates a multiple exchange rate regime.
Traders said demand for US currency has been driven by local companies as offshore funds sold tiny amounts. But traders expect volumes to turnaround next week as the central bank prepares to sell open market (OMO) bills after a recent drought of issuance.
"For next week we expect some offshore inflows. We could start trading at around 359.50," one trader said. "We could see some new monies coming with an OMO auction next week."
The Tanzanian shilling is projected to hold steady next week due to expected US dollar inflows from corporates preparing to make payments in the local currency.
On Thursday, the Tanzanian currency was quoted at 2,295/2,305 compared to an average of 2,294/2,304 recorded last week, one commercial bank trader said.
"We expect the shilling to hold steady next week or slightly appreciate because corporates will be buying shilling to pay their end of the month obligations," she said.
The Ugandan shilling is seen trading in a tight range over the next one week amid subdued appetite for hard currency from both players in the interbank and merchandise importers.
At 0842 GMT commercial banks quoted the shilling at 3,695/3,705, compared with last Thursday's close of 3,680/3,690.
A trader at one of the leading commercial banks said appetite for hard currency was generally flat from among both banks and large importers.
"It's been largely quiet on the demand side for a couple of weeks and I don't think appetite will improve soon," he said, and forecast the shilling would swing in the 3,680-3,710 range in the coming week.