African currencies outlook

Kenya's and Uganda's shillings, which have both plumbed a string of record lows this year amid soaring inflation, are likely to stay under pressure next week with importers continuing to demand hard currency. The Kenyan shilling is seen weakening further from an all-time low of 92.25 hit against the dollar on Thursday, pressured by importer demand for greenbacks, especially from the energy sector.
The shilling, which has lost 14.3 percent so far this year, was at 92.15/35 against the dollar, weaker than last Thursday's close of 91.10/20.
UGANDA Uganda's shilling, which, like its Kenyan counterpart, has hit a string of all-time lows this year, will stay under pressure due to dollar demand from the energy and construction sectors, traders said. The central bank has shown regular willingness to sell dollars around 2,600, though some traders do not believe it has the foreign reserve muscle to prop up the currency.
TANZANIA Tanzania's shilling is expected to hold steady amid low dollar demand and a relative shortage of the local currency. Commercial banks quoted it at 1,590/1,598 to the dollar on Thursday, compared with 1,588/1,593 a week ago. The unit hit a record low of 1,622 on July 4. Traders said the unit was likely to remain in a 1,590-1,600 range in the coming weeks.
NIGERIA The naira is expected to weaken against the dollar as most energy companies in the Africa's top crude exporter have concluded their monthly dollar sales. The naira was trading at 152.65 to the dollar on the interbank market on Thursday, weaker than Wednesday's close of 152.55 as some lenders covered short positions. The central bank sold $250 million at 150.77 naira to the dollar at the auction, short of the $313.59 million demanded and the $400 million sold at 150.62 per dollar on Monday.
GHANA The cedi is expected to remain stable after falling slightly in the wake of a 5-year bond auction last week, traders said. Jacob Brobbey of Barclay's Bank quoted the unit at 1.5140/65, slightly up from Wednesday's close of 1.5145/70.
ZAMBIA The kwacha is expected to drift sideways. Commercial banks quoted the currency of Africa's leading copper producer at 4,800 to the dollar versus 4,785 a week ago. "We expect the kwacha to be range-bound next week because there is no major development that is likely to have significant impact," one trader said. Zambia's currency met firm resistance around 4,600 during 2010. On the few occasions it breached that level, it went on to test but failed to breach 4,550.