African currencies week ahead: Kenya, Ghana currencies to weaken on dollar demand

Kenya's shilling and Ghana's cedi could weaken next week on increased dollar demand, while Zambia's currency is seen strengthening further on dollar inflows chasing government debt.
KENYA: An expected surge in dollar demand by importers could weaken the shilling next week, after the currency traded stronger following a central bank sale of dollars on Tuesday. At 0847 GMT, commercial banks quoted the shilling at 96.00/10 to the dollar, from 95.25/35 a week ago. "From next week, importers are going to start buying dollars in anticipation of end-month demand. So we could still continue to see the shilling remain under pressure," Bobby Otieno, treasurer at Ecobank Kenya, said. Traders said they forecast the shilling to trade between 96.00 to 97.00 against the dollar next week.
GHANA: The cedi hit a record low on Wednesday and could remain under pressure on strong dollar demand, traders said. "The reason is simple, supply is weak while demand is strong," said Michael Akpakli, a trader for Barclays Bank Ghana. The cedi traded at 3.9350-3.9750 to the dollar at 1200 GMT on Thursday, after briefly touching 3.9400 on Wednesday, part of a slide that has seen it fall by 17 percent this year and 31 percent last year.
The Bank of Ghana surprised markets by raising the benchmark interest rate by 100 bps to 22.0 percent in part to slow the cedi's decline, Governor Henry Kofi Wampah said.
NIGERIA: The naira is seen stable due to restrictions set by the central bank on the forex market since February. The naira traded at 198.5 to the dollar on Thursday at 1133 GMT compared with the 197-199 range in the previous week. Traders said dollar sales by some oil multinational, including state-owned NNPC provided liquidity in the market.
The central bank's Monetary Policy Committee is due to meet on May 19 but forex dealers say there might be no reprieve on the prevailing tight control in forex market, which has restricted access to dollar by importers.
TANZANIA: The shilling could strengthen marginally helped by expected dollar sales by corporates seeking to stock up on the local currency to meet salary and tax obligations. Commercial banks quoted the shilling at 2,010/2,020 to the dollar, weaker than 1,990/2,000 a week ago. "The outlook is that we expect the shilling to appreciate slightly in the short-term view from next week to the end of the month due to month-end inflows from corporates seeking to pay taxes, salaries and operating costs in the local currency," said Sameer Remtulla, a dealer at Commercial Bank of Africa Tanzania. The Bank of Tanzania said it had traded $36.1 million on the interbank foreign exchange market over the past week.
UGANDA: The shilling is forecast to weaken on an anticipated pick up in corporate dollar demand. At 1023 GMT commercial banks quoted the shilling at 2,990/3,000, stronger than last Thursday's close of 2,993/3,003.
"Some moderate depreciation risk is possible," said Shahzad Kamaluddin, a trader at Crane Bank, referring to the shilling. Demand for the greenback has been largely subdued this week with traders attributing it to corporates stock piling the local currency to meet their tax payments. The local currency is 7.5 percent weaker against the dollar so far this year.
ZAMBIA: The kwacha is expected to remain bullish on increased dollar inflows from offshore players seeking to invest in government securities. At 1130 GMT, the kwacha was quoted at 7.2100 per dollar from 7.3000 a week ago and commercial bank traders said the currency of Africa's second-leading copper producer could gain even more. "Next week is the government bond tender which is likely to attract more foreign investors. We expect a wide trading range of 7.0000/7.3000," one commercial bank trader said.