Dollar sales from oil companies could help Nigeria’s naira stabilise in the next few trading sessions after hitting record lows. Other African currencies are seen rangebound or weaker due to rising importer demand.
NIGERIA
Traders expect Nigeria’s naira, which has hit a record low of 187 to the dollar, to steady next week, anticipating dollar sales by the state-owned oil company.
The economy’s vulnerability to falling world oil prices prompted the central bank to devalue the naira by 8 percent and raise interest rates sharply last week.
“We are expecting large dollar sale from NNPC next week and some of the oil companies to boost dollar liquidity in the market and further calm the market,” another dealer said.
The naira closed at 180.10 to the dollar on the interbank market on Thursday, weakening from 177.40 last week.
Dealers said sustained central bank dollar sales have helped calm the market.
KENYA
The Kenyan shilling is expected to trade in a tight band against the dollar in the next week as demand from importers is offset by central bank support.
Leading commercial banks posted the shilling at 90.20/30 per dollar on Thursday, barely moved from last Thursday.
Traders said it was likely to remain in a tight band of 90.00-90.50 to the dollar. The shilling is down 4.7 percent against the dollar this year, hovering at near three-year lows.
“We expect the central bank to support the shilling as we head to the end of the year,” said Ian Kahangara, a trader at National Bank.
Frequent attacks by insurgents from neighbouring Somalia this year have scared tourists away, cutting into a major source of hard currency and putting pressure on the shilling.
UGANDA
The Ugandan shilling could strengthen next week on hard currency inflows from charities and light dollar demand.
At 1135 GMT commercial banks quoted the shilling at 2,758/2,768 compared with Thursday’s close of 2,775/2,785.
“Some inflows are coming from NGOs (non-governmental organisations). Historically also demand around this time tends to be subdued… the shilling will likely play in a range though some strengthening is possible,” Benon Okwenje, a trader at Stanbic Bank said.
The local currency is down 8.6 percent against the dollar so far this year and Okwenje said it could trade in the 2,750-2,770 range in the short term.
TANZANIA
The Tanzanian shilling is seen weaker next week on growing dollar demand from the energy sector, traders said.
The shilling traded at 1,750/1,755 to the dollar on Thursday, weaker than 1,745/1,753 a week ago.
“There is very little supply of dollars to the market,” Flora Mrema, a trader at TIB Development Bank, said, adding that dollar demand was coming from energy firms.
Market participants expected the shilling to trade in the 1,750-1,760 range next week.
The central bank said on its website it traded $30.8 million on the interbank foreign exchange market in the past week.
GHANA
Ghana’s cedi could come under pressure next week due rising dollar demand and slow hard currency inflows.
The cedi was trading at 3.2050 to the dollar by 1200 GMT compared with 3.2000 last week.
“We expect a sustained drop in offshore (dollar) flows to push spot up to trade within the 3.2000/3.2150 band next week,” Barclays Bank Ghana trader Michael Akpakli said.
The cedi slumped nearly 40 percent in the first half of this year, but a Eurobond issue and cocoa loan inflows have helped it recoup some of the losses.
ZAMBIA
The kwacha remains squeezed by sustained demand for foreign currency from retailers and manufacturers and weak dollar inflows.
At 1252 GMT commercial banks quoted the kwacha at 6.3550 per dollar from a close of 6.3150 a week ago.
The local unit of South Africa’s FNB Bank linked the weakness to general pressure on risky emerging market currencies as U.S. economic strength bolsters the dollar.
Reuters
