LAGOS: Nigeria's volatile naira is likely to steady next week on dollar sales by oil companies, while East African currencies are expected to be supported by central bank intervention.
NIGERIA
The naira is likely to trade around its present levels next week on the back of expected month-end dollar sales by some energy companies and intervention by the central bank.
The local currency has remained volatile in the wake of falling oil price and the exit of offshore investors in local debt and equity last year.
The local currency was trading around 189.90 to the dollar on Thursday, same level it closed a week ago. The naira was however weaker than its Wednesday's close of 186 after dollar sales from state energy company NNPC buoyed the currency.
NNPC sold around $350 million to some lenders on Wednesday, while the local unit of Royal Dutch Shell sold undisclosed dollar amounts on Thursday, keeping the local currency stable.
Most oil companies in Africa's top crude exporter sell dollars to obtain local currency for their domestic obligations.
"We expect that the local currency will derive further support from the usual month-end oil companies' dollar sale in the coming days," Citibank said in a research note on Thursday.
KENYA
Kenya's shilling is expected to trade in a tight range, with traders saying they were on the lookout for any central bank action that would keep it from weakening further.
At 0815 GMT, commercial banks quoted the shilling at 91.70/80 to the dollar, unchanged from last Thursday's close.
Last week traders said the bank sold an unspecified amount of dollars to keep it from going past the 91.70 level.
"After we saw central bank come in last week, people have been jittery about getting to those levels, so we are on a wait and see," Ian Kahangara, trader at National Bank of Kenya, said.
Traders said they forecast the shilling to trade in the 91.70 to 92.00 range in coming days.
UGANDA
The Ugandan shilling was also seen rangebound, underpinned by expected central bank interventions and scarce local currency liquidity.
At 1135 GMT commercial banks quoted the local currency at 2,860/2,870, stronger than last Thursday's close of 2,880/2,890.
"The central bank has demonstrated resolve to keep the shilling in line... we're likely to see rangebound stability," said Isaac Iga, chief dealer at Orient Bank.
The central Bank of Uganda (BoU) has sold dollars in the market five times this month to prop up the local currency.
Much of the depreciation for the shilling, which is down 3.1 percent against the greenback this year, has been caused by demand from commercial banks eager to hedge against dollar.
Iga said the shilling would likely exchange hands in the 2,840-2,880 range in the coming days.
TANZANIA
The shilling could weaken on dollar demand by importers after gaining this week from month-end hard currency inflows.
Commercial banks quoted the shilling at 1,782/1,792 to the dollar on Thursday, stronger than 1,835/1,845 a week ago.
Sameer Remtulla, a dealer at Commercial Bank of Africa Tanzania, said the central bank had "intervened by selling more dollars to the market, but the shilling will likely be under pressure next week."
Traders expected the shilling to trade in the 1,810-1,820 range over the coming days.
The Bank of Tanzania said on its website it had traded $52.75 million on the interbank foreign exchange market over the past week.
ZAMBIA
The kwacha is expected to remain volatile next week as investors in Africa's second largest copper producer digest the outcome of a presidential election last week.
At 1115 GMT on Thursday, commercial banks quoted the kwacha at 6.4700 per dollar from 6.4350 a week ago. "The short term outlook is for the volatility to remain quite substantial but to reduce as we move further from elections," one commercial bank trader said. Zambia's ruling party presidential candidate Edgar Lungu defeated his closest rival Hakainde Hichilema who said the election had been "stolen".
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