Nigeria's naira is likely to remain under pressure next week as delayed elections approach, while Kenya's shilling is also likely to feel the heat from dollar-hungry oil importers.
NIGERIA The naira is expected to weaken to around 154.90 to the dollar next week as month-end dollar sales by energy multinationals thin out and strong demand for hard currency persists during an election period. The naira was trading at 154.33 to the dollar early on Thursday, weaker than Wednesday's close of 154.05.
The central bank sold $400 million at 151.91 a dollar at its bi-weekly foreign exchange auction on Wednesday, below demand of $428 million, and $5.59 million in short-tenored foreign exchange forwards at the third auction of its kind.
KENYA Kenya's shilling is likely to remain under pressure, although the extent of any weakness will depend on the level of dollar demand from energy importers and whether the central bank decides to inject shilling liquidity through reverse repurchase agreements.
Commercial banks quoted the shilling at 84.70/80 to the dollar, down from last Thursday's close at 83.15/25. The unit lost more than a third of a percentage point on Wednesday after the central bank pumped in 5.63 billion shillings through a reverse repo - basically buying government bonds from banks to inject cash into the system.
Traders said global oil prices at 2-1/2 year highs had made local oil importers pile up dollar purchase orders on fears the crude price could head higher. Traders expect the shilling to trade in a wide range of 83.50-85.50 against the dollar in the coming week, with a break past 85.00 ushering in a target of 86.00.
UGANDA Uganda's shilling is likely to extend a rally that has taken it to a six-week high against the dollar due to tight domestic liquidity and interbank dollar-selling. Commercial banks quoted the unit at 2,345/2,350, its strongest since February 24. It closed at 2,398/2,403 a week ago.
"We have very tight liquidity and many banks are short on shillings and are selling dollars. Demand for dollars is also low and these conditions are expected to continue in the next one week," said Faisal Bukenya, head of market making at Barclays Bank Uganda.
TANZANIA Tanzania's shilling is set to ease as companies buy dollars to pay dividends abroad. Commercial banks quoted it at 1,502/1,507 to the dollar, slightly down 1,500/1,505 a week ago. "With the coming demand for dollars for dividend payouts this month, the shilling will weaken a little bit," said Hamisi Mwakibete, head of trading at Commercial Bank of Africa.
ZAMBIA The kwacha is expected to firm against the dollar as investors convert foreign exchange earnings to the local unit in order to pay a quarterly tax due on April 14. Commercial banks on Thursday quoted the kwacha at 4,690 from 4,720 a week ago. "We expect an even stronger kwacha in the coming week and beyond because corporation tax is due and exporters who earn in dollars will have to convert to kwacha," one trader said.