African currencies week ahead: Kenyan shilling under pressure, Uganda's to be stable

Kenya's shilling is expected be under pressure against the dollar in the next week, while Uganda's will be stable, traders said.

KENYA - The Kenyan shilling is seen under pressure due to increased end month dollar demand from the energy sector and some multinational companies, traders said.

Commercial banks quoted the shilling at 101.25/45 per dollar, compared with 100.50/70 at last Thursday's close. "Activity was muted but demand is coming back...we expect this to push the dollar higher," said a senior trader from one commercial bank.

UGANDA - The Ugandan shilling is expected to trade broadly stable in the week ahead mostly on the back of inflows from offshore investors and non-governmental organisations.

At 1208 GMT commercial banks quoted the shilling at 3,665/3,675, unchanged from last Thursday's close. A trader at a leading commercial bank said hard currency inflows from offshore investors who participated in this week's Treasury bond auction could help give support to the local unit.

The central bank sold two and 15-year bonds worth a combined total of 285 billion Ugandan shillings ($77.76 million). "I think some charities will also be doing conversions as end-month approaches and those inflows will also help the shilling," the trader said.

TANZANIA - The Tanzanian shilling is expected to slightly appreciate next week due to inflows from corporates buying the local currency to meet their end-of-month obligations.

Commercial banks quoted the shilling at 2,310/2,315 on Thursday, the same levels recorded a week earlier. "The shilling has been stable and we expect it to slightly appreciate next week because corporates, which receives income in dollars, will be buying the shilling to meet their end-of-the month obligations such as paying salaries and taxes," a trader at a commercial bank in Dar es Salaam said.

"The demand will continue to be driven by manufacturers and oil importers because traders have slowed down due to slow production and importation issues in China," he added.

NIGERIA - Nigeria's naira is seen weaker next week due to liquidity shortages on the currency market after lower yields on the debt market keep foreign investors on the sidelines, traders said.

The currency was quoted weaker at around of 364.75 naira to 365 naira per dollar on Thursday on the over-the-counter market as against 364 it has been for more than a week.

The central bank has been helping to meet some dollar demand, keeping the naira stable on the official market at 306.95. Last week, the central bank introduced longer-term futures contracts on the naira in a move to lure more foreign inflows and buff up its dwindling dollar reserves. "The market is on bid ... foreign investors are not coming. The fundamentals are not there for them to come," one trader said.

ZAMBIA - The kwacha is likely to marginally firm against the US dollar in the coming week as companies sell hard currency to meet month end obligations.

On Thursday, commercial banks quoted the currency of Africa's second-largest copper producer at 14.6000 per dollar from a close of 14.6500 a week ago.

"It should make some minor gains because of month end dollar conversions," independent financial analyst Maambo Hamaundu said.