African currencies week ahead: Commodity prices, dollar demand weigh on African currencies

Weak copper prices were expected to weigh on Zambia's kwacha next week and corporate dollar demand was likely to put pressure on Ghana's cedi, but Kenya's shilling was expected to trade little changed.
GHANA: Ghana's cedi may weaken further as seasonal demand for dollars from local businesses increases. By 1000 GMT on Thursday, the cedi was quoted at 3.8800 to the dollar, compared with 3.8300 a week ago. After a fairly stable fourth quarter, it came under pressure last week as importers sought dollars. "Having touched the 3.90 levels, forex traders and corporates are tempted to buy and hold the dollar to guard against the usual early year depreciation of the cedi," said Joseph Biggles Amponsah at Dortis Research. The cedi may reach 3.95, he said.
ZAMBIA: The kwacha is expected to remain under pressure next week from weak copper prices and a limited supply of dollars in the local market.
At 1103 GMT on Thursday, commercial banks quoted the currency of Africa's second-largest copper producer at 11.0700 to the dollar, compared with a close of 11.0100 a week ago. "With copper prices not showing signs of significant recovery coupled with strong greenback demand, we should see the local currency remain on the back foot," Zambia National Commercial Bank analysts said in a note.
KENYA: The Kenyan shilling was expected to stay in its recent range next week, supported by rising yields for government debt and the possibility of central bank intervention if the currency threatens to weaken beyond the recent band. At 1314 GMT on Thursday, the shilling was at 102.30/50, weaker than last Thursday's close of 102.20/30. In recent weeks, it has mostly traded between 102.00 and 102.50. The central bank often sold dollars around the 102.50 level late last year.
"The shilling could be range-bound as at these levels. (The central bank) has been quick to defend the currency," said one Nairobi-based trader, adding that a recent uptick in yields on 182-day and 364-day Treasury bill yields was also helping.
NIGERIA: Nigeria's naira was expected to face further pressure on the parallel market next week after the central bank halted dollar sales to foreign exchange bureaux.
Traders said demand for dollars had shot up after that decision and they remained scarce. The naira weakened to 300 on the parallel market on Thursday from 270 last week. "We see the naira trading within a range of 300-320 next week if the dollar shortage persists on the parallel market," one currency trader said. The naira is trading on the official interbank market at 199.50 a dollar, unchanged from last week. It is expected to hold at that level on the official market this week.
UGANDA: Uganda's shilling is likely to weaken in the next week, weighed down by concern about next month's election and the possibility of violence. At 0909 GMT commercial banks quoted the shilling at 3,475/3,485, weaker than last Thursday's close of 3,405/3,415.
"What we see now is more of pre-election sentiment that is driving the shilling weakness, which is creating a dent to already fragile market confidence," said Stephen Kaboyo of Alpha Capital Partners. Voting takes place on February 18.
TANZANIA: The Tanzanian shilling was expected to hold steady against the dollar, helped by a slowdown in demand for dollars from oil companies and a shortage the local currency. Commercial banks quoted the shilling at 2,170-2,180 to the dollar on Thursday, stronger than 2,185-2,195 a week ago.
"There is a lot of focus on the shilling right now for investment in Treasury bills, which has caused it to appreciate," said Sameer Remtulla, a dealer at Commercial Bank of Africa Tanzania, adding it should hold these levels until the end of the month, after which it could make gains.