The Nigerian naira is seen weakening in the days ahead on the back of accumulated demand, while the Kenyan shilling could steady as importer appetite in the energy sector sags.
Nigeria
Nigeria’s naira is seen weakening on the black market as dollar demand balloons from foreign investors and importers with payment obligations that have accumulated amid hard currency shortages triggered by an oil price crash, traders said.
The black market naira traded on the streets fell to 450 against the dollar on Thursday, reflecting the build-up of demand pressure. The naira had firmed on the unofficial market last week after a coronavirus lockdown was eased.
Meanwhile the naira is seen rangebound on the official and over-the-counter spot markets, traders say, as bidders resist weakening the currency since the majority of dollar supply is from the central bank. The bank resumed forex sales last week to help importers and individuals with dollar expenses abroad ramp up economic activity following a phased easing of the coronavirus lockdown.
Kenya
The Kenyan shilling is seen broadly stable this week, with demand for hard currency from most importers including energy firms seen remaining thin.
At 1125 GMT on Thursday commercial banks quoted the shilling at 106.50/70 per dollar, compared with 105.90/106.10 at last Thursday’s close. “We have oil prices at a really low level and very low demand, so that might compensate for any weakening pressure on the shilling,” said a senior trader from one commercial bank.
Tanzania
Tanzania’s shilling is expected to remain stable this week on the back of some inflows from commodity exports. Commercial banks quoted the shilling at 2,309/19 against the dollar on Thursday, the same level as last week.
A trader at a commercial banks in Tanzania’s commercial capital Dar es Salaam said the local currency was likely to remain stable with hard currency supplies from exports of commodities like minerals matching demand. Tanzania mainly ships gold, among other minerals.
Uganda
Uganda’s shilling is seen trading with a firmer tone, helped by a central bank mop-up of excess local currency liquidity from the interbank market.
At 1126 GMT commercial banks quoted the shilling at 3,780/3,790, compared to last Thursday’s close of 3,790/3,800.
The central bank on Thursday removed a total of 690.5 billion Ugandan shillings ($182.6 million) worth of excess liquidity in the interbank market via a seven-day repurchase agreement (repo) and a deposit auction.
“I see the unit (shilling) trading sideways, but broadly there will be some bias on the strengthening side,” said a trader from one commercial bank.
Zambia
The kwacha is seen trading slightly weaker against the dollar as demand for the U.S. currency picks up after tax payments. On Thursday, commercial banks quoted the currency of Africa’s second-largest copper producer at 18.2500 per dollar, up from 18.4130 at the close of trading a week ago.
“It should remain within the 18-18.5 range with chances of losing a bit of ground after the end of this week’s VAT (value-added tax) payments,” one commercial bank trader said. Reuters
