Kenya’s currency is expected to trade on the back foot against the U.S. dollar as Uganda’s firms and those of Nigeria, Tanzania and Zambia hold steady.
The Kenyan shilling is seen under pressure this week from oil importers and some multinational companies buying dollars to meet their monthly obligations, traders said.
At 0940 GMT, commercial banks quoted the shilling at 106.70/90 per dollar, compared with 106.00/20 at last Thursday’s close.
“There will be increased demand from mid-month… Next week we expect to see oil importers making payments,” said a senior trader from one commercial bank.
The Ugandan shilling is expected to trade with a firming tone versus the dollar as mid-month tax payments trim demand by some importers.
At 0959 GMT commercial banks quoted the shilling at 3,730/3,740 against the dollar, compared to last Thursday’s close of 3,765/3,775.
“Demand will be minimal since we have tax payments, that will probably keep the local unit biased on the stronger side,” a commercial bank trader said.
Nigeria’s naira is seen range-bound across markets this week, traders say, after the central bank last week revised the currency rate on the futures market amid dollar shortages plaguing the economy.
The naira opened at 387.50 against the dollar, a range at which it has traded since this month. On the official market, backed by the central bank, the naira was quoted at 361.
The central bank revised the settlement quote for the 5-year currency to 578.37 naira on Wednesday, just off a record low of 584.11 naira touched last week.
Dollar demand from investors and importers has ballooned on the interbank market with payment obligations accumulating amid hard currency shortages triggered by an oil price crash. This has funnelled demand to the black market, where the naira traded at around 450 on Thursday.
Tanzania’s shilling is expected to hold steady this week, drawing support from improving economic activity as coronavirus restrictions gradually ease.
Commercial banks quoted the shilling at 2,309/2,319 on Thursday, the same levels recorded last week.
“We expect the impact of COVID-19 to start easing in upcoming weeks,” a trader at a leading commercial bank said, adding this would help the local currency.
The kwacha is likely to trade flat against the dollar due to reduced imports as disruptions in global supply chains caused by COVID-19 limit international trade.
On Thursday, commercial banks quoted the currency of Africa’s second largest copper producer at 18.2140 per dollar from a close of 18.1040 a week earlier.
“Should importer demand continue slowing down, the local unit is likely to remain flat in interim,” a local commercial bank, Cavmont, said in a note.