Kenya’s shilling will come under pressure this week, while Tanzania’s will likely hold firm, traders said. Uganda’s shilling was seen strengthening, Zambia’s kwacha holding ground and Nigeria’s naira weakening.
KENYA
The Kenyan shilling will likely come under pressure due to increased dollar demand from the energy sector and from importers as COVID-19 restrictions ease and economic activity resumes, traders said.
“Being an import-based economy, after the lockdown lifted … the energy sector and general importers shipping goods into the country need more dollars,” said a senior trader from one commercial bank.
President Uhuru Kenyatta announced a phased reopening of the country on Monday. Domestic flights are due to resume on July 15, and international ones from Aug. 1.
Commercial banks quoted the shilling at 106.75/95 per dollar on Thursday, marginally weaker than last Thursday’s close.
TANZANIA
Tanzania’s shilling is expected to hold steady due to the strong support of inflows from exports since the easing of coronavirus-related restrictions, traders said.
Commercial banks quoted the shilling at 2,312/20 levels against the greenback on Thursday, unchanged from last week.
“We foresee the Tanzanian shilling remaining steady against the dollar, supported by dollar supply from exports as we expect increased activity in trading,” said Terry Karanja, a treasury associate at Nairobi-based forex trading firm AZA.
“We also see neighbouring countries like Kenya, opening their economies, boosting trade activity between the countries,” Karanja added.
UGANDA
The Ugandan shilling is seen strengthening as appetite for hard currency continues to take a hit from slumping consumer spending caused by the impact of the coronavirus, traders said.
At 0934GMT on Thursday, commercial banks quoted the shilling at 3,705/3,715, compared with last Thursday’s close of 3,720/3,730.
“(Dollar) appetite by importers has really plummeted and we know that’s connected to the general slump in consumer demand,” said an independent foreign exchange trader in the capital Kampala.
He said the shilling would probably strengthen below the key psychological level of 3,700 in the coming week as importer demand continues to drop.
NIGERIA
Nigeria’s naira is expected to trade at the weaker rate after the central bank last week unified its multiple exchange rates in a bid to ease dollar shortages that have plagued the country for months, traders said.
The naira was quoted at 381 on the official market on Wednesday after it lost 5.5% from its previous rate to trade close to the over-the-counter spot market, widely used by investors and importers.
The central bank has been under pressure from the World Bank and the International Monetary Fund to carry out currency reforms in order to qualify for budget-support loans, and from the Nigerian government to get more naira for its crude oil receipts.
“They merged FX rates not the different trading windows,” one trader said, adding that he thought the central bank needed to allow the currency to trade freely.
“I don’t think liquidity will return in the short term. The general macros need to change for that to happen.”
ZAMBIA
The Zambian kwacha is likely to hold firm against the dollar this week as declining imports limit demand for hard currency.
On Thursday, commercial banks quoted the currency of Africa’s second-largest copper producer at 18.0500 per dollar from a close of 17.9500 a week earlier.
“It should hold within the current levels due to minimal trade because of COVID-19 restrictions,” independent financial analyst Maambo Hamaundu said.
Credit: Reuters
