Frontier African currencies may come under slight pressure next week as companies restart full operations after the holiday season and start buying dollars.
KENYA Kenya's shilling is set for a volatile week against the dollar, with a central bank rate-setting meeting on January 11 and importers in the market for dollars.
The shilling fell by as much as 4.8 percent this week to 89.00 to the dollar before recouping most of its losses on Thursday after the central bank mopped up 6 billion shillings through repurchase agreements and sold an unspecified amount of dollars to commercial banks.
It was quoted at 86.40/60 against the dollar, weaker than last Thursday's close of 85.10/30. Traders said they expected the shilling to remain volatile if dollar.
UGANDA The Ugandan shilling is forecast to weaken moderately against the dollar, pressured by demand from the manufacturing and energy sectors and tracking possible weakness in the currency in Kenya, Uganda's biggest regional trading partner.
Commercial banks in Kampala quoted the currency of one of Africa's top coffee producers at 2,447/2,457, significantly firmer than last Thursday's close of 2,500/2,510. "We're firmly putting the holidays behind us so we expect demand from the big buyers like manufacturing and energy to start coming in," said Ahmed Kalule, trader at Bank of Africa.
TANZANIA The Tanzanian shilling is expected to hold steady against the dollar due to a domestic liquidity squeeze and slack demand for foreign exchange due to a sluggish resumption in trading after the holidays. Commercial banks in Dar es Salaam quoted the shilling at 1,585/1,595 against the dollar, weaker than last Thursday's close of 1,577/1,587.
Traders said they expected the shilling to trade in the 1,580-1,590 range in the days ahead. "Tight liquidity has benefited the shilling following monetary policy measures taken by the central bank. That is why we are seeing Treasury bonds and bills being undersubscribed," said Fred Siwali, a dealer at CRDB Bank.
GHANA The cedi is expected to inch lower amid firm demand for the dollar but scant supply from large forex-selling companies that are yet to crank up their operations after the holidays, traders said.
Jacob Brobbey of Barclays Bank quoted the interbank cedi-dollar exchange rate at 1.6600/25, slightly firmer than an open of 1.6605/30. "Forex buyers have started the year strongly, but sellers are yet to get out of the blocks," he said. "Pressure will persist into next week unless we see improved supply for the traditional sellers such as the mining sector."
NIGERIA The naira is seen depreciating against the dollar on the interbank market as importers crank up demand for the greenback. The naira closed at 159.95 to the dollar on Thursday, firmer than its 163.15 close a week ago. It traded at 159.55 on Wednesday. Dealers said dollar demand could push the naira above the 160-161 next week unless the central bank cleared all foreign exchange demand at its bi-weekly auction and also sold directly to the market.