Uganda's shilling is likely to stay under pressure ahead of a February 18 general election, while Zambia's kwacha should strengthen due to a surge in copper prices to record highs.
UGANDA Uganda's shilling fell to a 3-week low against the dollar on Thursday and is likely to stay under major pressure next week as a February 18 general election nears and companies continue to demand the security of dollars. Banks in Kampala quoted the currency at 2,340/2,345 to the dollar compared with 2,300/2,310 a week ago. The retreat from 2,275 on January 27 towards 2,350 is almost certain to trigger another bout of central bank dollar sales to stabilise the unit, which fell to a life-time low of 2,392 on January 18.
ZAMBIA The kwacha should firm against the dollar, reflecting a surge in the price of copper, its major export, to record hhighs above $10,000 per tonne The unit was at a one-month high of 4,710 to the dollar on Thursday against 4,760 a week ago.
"We expect it to extend its gains and perhaps break below 4,700, a major support barrier," Standard Chartered's local head of global markets Stanley Tamele said.
KENYA Kenya's shilling is likely to weaken due to high dollar demand from the oil sector and thin foreign exchange inflows, most notably due to a drop in tea exports to restive Egypt, Kenya's leading market for the commodity. Tea was Kenya's main foreign exchange earner in 2010.
Commercial banks quoted the shilling at 81.25/45 to the dollar - nearly a five-month low - compared with 81.10/20 a week ago. Traders said they expected dollar demand to pick up because an expected drought in east Africa's biggest economy could see more people buying fuel for generators to supplement hydropower, the main source of electricity.
TANZANIA Tanzania's shilling is likely to stay rangebound with most companies well-stocked with dollars for the time being. Commercial banks quoted the unit at 1,500/1,505, compared with 1,503/1,508 a week ago - a range that traders expect to continue.
"There is very thin demand from corporates. We have seen very little activity from the oil sector," said Hamisi Mwakibete, local head of trading at Commercial Bank of Africa.
GHANA The cedi looks likely to continue its sharp recovery from record lows due to dollar sales from companies and the central and foreign inflows ahead of a $264 million 3-year bond issue next Wednesday open to outsiders. The cedi was at 1.51 on Thursday, compared with a record low of 1.57 a week ago that capped a four-month losing streak.
NIGERIA The naira is expected to depreciate marginally as dollar sales from energy companies thin out. It gained on Thursday to 152.15 naira to the dollar from 152.28 at Wednesday's close as the impact of remaining inflows from some oil firms hit the market.