African currencies are seen weaker next week but dealers in Nigeria said they hoped the central bank could relax its foreign exchange trade restrictions under a new government due to take office on Friday.
"I think it's just on the back of sustained demand, with little supply," a senior trader at one commercial bank said, referring to the shilling's steady decline. The shilling had hit an intraday low of 98.95/99.05 earlier on Thursday, hurt by a stronger dollar, slowing foreign exchange proceeds due to reduced tourist arrivals, and a widening current account deficit due to demand for imports like capital goods.
"The shilling is under pressure because there are no dollar inflows, while there is big demand for the US currency," said Theopistar Mnale, a dealer at TIB Development Bank.
"I think we'll continue to have strong month-end demand from corporates in import business as we have already seen this week," said Shahzad Kamaluddin, trader at Crane Bank. So far this year the Ugandan shilling is 9.3 percent weaker against the greenback and is seen losing more ground as Uganda's weak external trade balance position saps market confidence.
"It is expected to remain under pressure because the appreciation had no firm basis as it was anchored on an event. It should settle around 7.4-7.5," analyst Maambo Hamaundu said.
The naira was trading at 198.50 to the dollar on Thursday at 1156 GMT, unchanged from last week as the market remains inactive due to central bank's restrictions since February. "Nothing major is expected to happen in the immediately, but we hope to see a realignment of policies as soon as the new government unveils its policy direction," a dealer said.