NIGERIA
Nigeria's naira could start appreciating if presidential elections on Saturday are credible and violence-free, with foreign investors likely to view a victory by incumbent President Good luck Jonathan as a sign of stability.
Dollar demand has been persistently high in the run-up to the elections in Africa's most populous nation, as businesses and wealthy Nigerians take long dollar positions to hedge against the risk of instability around the polls.
Parliamentary polls last Saturday, though marred by localised violence and isolated allegations of fraud, were generally deemed to have been among the most credible in decades.
A similar outcome on Saturday would boost confidence.
"There is a significant disconnect between risk sentiment onshore and offshore. Locals shifted to the dollar and will go long naira again," said Samir Gadio, emerging markets strategist at Standard Bank.
"It is likely the naira will appreciate in the coming weeks," he told Reuters.
The naira was trading at 155.05 to the dollar early on Thursday, stronger than the 155.20 naira at Wednesday's close.
The central bank sold $300 million at 152.58 a dollar at its bi-weekly foreign exchange auction on Wednesday, below demand of $444 million.
More is at stake in the presidential election than the parliamentary polls, and while the indications so far point to a relatively calm vote, violence or prolonged legal challenges to the outcome could spook the market, traders said.
"It is not predictable how the naira will trade next week. It depends on the outcome of Saturday's election," one currency dealer in the commercial capital Lagos said.
KENYA
The Kenyan shilling is seen gaining ground due to tight market liquidity, as traders look to sell long foreign currency positions and keenly watch the country's central bank, but dollar demand from oil companies could dampen that.
At 1100 GMT, commercial banks quoted the shilling at 84.10/20 to the dollar, compared with last Thursday's close of 84.40/50.
Traders said there was increased overnight lending at high interest rates that are expected to drag into next week.
Central Bank of Kenya injected 5.7 billion shillings on April 6 at a weighted average of 2.976 percent.
"The high overnight lending is a disincentive to hold long dollar positions. Interbank players are likely to sell these positions in preference for the shillings," said Mwambu Malamba, a trader at Commercial Bank of Africa.
But high oil prices are expected to put pressure on the shilling, with east Africa's largest economy looking to adjust fuel prices upwards, traders said.
"We expect the shilling to weaken on high oil prices, we have seen good demand from the oil sector," said Sameer Lagadia, head of trading at Diamond Trust Bank.
Inflows from the tea sector are expected to give the local currency some reprieve, said Lagadia.
UGANDA
The Ugandan shilling is seen slightly weaker against the dollar, due to demand from the oil sector.
Commercial banks quoted the local currency at 2,350/2,360 against the dollar, compared with last Thursday's close of 2,345/2,350.
"We expect the shilling to weaken a little bit as corporates come to buy and push it a little bit basically oil companies' (dollar) demand," said Peter Mboowa, a trader at Kenya Commercial Bank Uganda.
Traders expect the shilling to trade in the 2,350-2,375 range in coming days.
Traders say the shilling had shrugged off capital gains tax payments by UK explorer Tullow Oil to the Ugandan government after selling stakes in its Ugandan properties to France's Total and China's CNOOC
"The only outside dollars have taken interest in T-bill and T-bond rates going up. That is why offshore investors are coming in, but not much effect is expected," said Ali Abbas, a trader at Crane Bank Uganda.
TANZANIA
The Tanzanian shilling is expected to come under more pressure from corporate demand in the coming week.
Commercial banks quoted the local currency at 1,510/1,515 to the dollar compared with 1,502/1,507 at the close of last Thursday's session.
"After remaining stable for the past week, speculation kicked in, if we see serious demand from telecoms and energy sectors, the shilling could further weaken next week," said CRDB Bank trader Frank Ndugulile.
"There are no inflows coming in and the central bank is mildly supporting the shilling at the moment."
Traders said they expect the shilling to trade in the 1,510-1,520 range in the coming week.
"The long-term sentiment is that the shilling will likely weaken, although it could appreciate slightly on a short-term basis," said Neema Rwehumbiza, a money markets trader at Barclays Bank Tanzania.
Between last Wednesday and Wednesday, the central Bank of Tanzania traded $44.9 million on its Interbank Foreign Exchange Market, according to statistics