NAIROBI, Jan 13 (Reuters) – Kenya’s shilling and Zambia’s kwacha are expected to weaken against the dollar in the next week to Thursday, while Uganda’s shilling is forecast to be steady, traders said.
Nigeria’s naira is seen range-bound.
The Kenyan shilling is expected to weaken, undercut by soaring dollar demand from importers, especially in the energy sector.
Commercial banks quoted the shilling at 113.30/50, compared with last Thursday’s close of 113.10/30.
“There’s a lot of (dollar) demand pressure across the board. This pressure will remain with us,” a trader at one commercial bank said, adding much of the demand was from fuel importers.
The Uganda shilling is forecast to be stable as earlier expectations of increased dollar demand from various sectors fuelled by a re-opening of the economy failed to materialise.
Commercial banks quoted the shilling at 3,520/3,530, compared to last Thursday’s close of 3,535/3,545.
A trader at one of the commercial banks said although they had expected a rebound in demand for dollars from importers triggered by a re-opening of the economy, it had failed to materialise at a scale anticipated.
“We are seeing small increases but not anything close to what we had hoped for,” he said.
This month the Ugandan government re-opened schools and lifted a range of longstanding measures aimed at curbing COVID-19’s spread.
Tanzania’s shilling is expected to hold steady, with support coming from dollar inflows from commodities matching demand from the energy and manufacturing sectors.
Commercial banks quoted the Shilling at 2,295/2,305 levels on Thursday, slightly stronger than the 2,302/2,312 levels recorded at last week’s close.
“We expect the shilling to be supported by export inflows from commodities such as gold and agricultural products in the week ahead,” Terry Karanja, a treasury associate at AZA, a Nairobi-based FX trading firm, said.
The kwacha is likely to weaken due to reawakening dollar demand from companies across all sectors as they return from the traditional festivity break.
On Thursday, commercial banks quoted the currency of Africa’s second largest copper producer at 17.0500 per dollar from 16.7939 at the close of business a week earlier.
However, the Zambia National Commercial Bank said a debt auction could lend support to the currency. “We are aware of the upcoming bond auction which is likely to attract offshore investors whose flows may slow the depreciation pace for the local unit,” the bank said in a note.
The Nigerian naira is seen range-bound in the coming week, as markets expect dollar demand to rise with political spending ahead of next year’s presidential election, traders said.
The currency eased to 572 naira per dollar on the parallel market on Thursday from 570 naira last week. On the official market, it traded outside an eight-month range of 409-415 against the dollar last week to a low of 443 naira.
Nigeria is preparing for a presidential election next year with political spending set to rise as parties select candidates.
“I expect the naira to be range-bound for now,” one commercial bank trader said, adding that pressure could build up as political party conventions near. (Reporting by Elias Biryabarema, Nuzulack Dausen, Chijioke Ohuocha and Chris Mfula; Compiled by George Obulutsa, Editing by Alexandra Hudson)