Kenya's and Uganda's shillings are likely to stabilise next week, continuing their recovery from record lows against the dollar earlier this year, amid muted demand for dollars in the run-up to Christmas.
KENYA Kenya's shilling is seen holding steady against the dollar in the days ahead and could firm slightly due to high interest rates and reduced dollar demand during the holiday season. Traders said the shilling could stay within the 83.00-84.00 level after it rallied 22 percent from a record low of 107 hit on October 11, thanks to a tight monetary stance that has seen the central bank rate raised by 11 points since October 5.
The shilling is still 3.7 percent weaker against the dollar this year. Commercial banks posted the shilling at 83.40/60 against the dollar, stronger than last Thursday's close of 85.70/90.
UGANDA Weak demand for Uganda's shilling as businesses shut down for Christmas is likely to keep the currency stable against the dollar over the next week after it slipped for two consecutive days in the interbank market. The currency of east Africa's third largest economy has benefited from a round of policy tightening by the central bank, recovering 17 percent of its value against the greenback since its September 23 record low of 2,901. He said the shilling would oscillate in the 2,400-2,430 range against the dollar through next Thursday.
TANZANIA Tanzania's shilling is expected to maintain its rally next week due to a slowdown in demand for dollars and a liquidity crunch that saw the central bank sell more dollars to commercial banks. Commercial banks in Dares Salaam quoted the shilling at 1,580/1,590 against the dollar, from last Thursday's close of 1,585/1,595. Traders said despite its rally the shilling was unlikely to trade below the 1,570 level or approach an eight-month high of 1,560 it hit on August 2.
NIGERIA Nigeria's naira is seen weakening further next week as dollar supplies to the interbank market dry up, while the end-of-year closure of the central bank's bi-weekly foreign exchange auction increases pressure on available hard currency. The naira was trading at 165.10 to the dollar on Thursday, its weakest in 10 weeks. It closed at 162.32 last Thursday. Traders said the market is short of dollars, yet demand for hard currency has not waned.
GHANA Ghana's cedi is expected to remain stable against the dollar until the end of the year due to limited trade and a lower demand for dollars, traders said. Christopher Nettey of Stanbic Bank quoted the interbank cedi-dollar exchange rate at 1.6380/05, slightly down from an open of 1.6370/95.
ZAMBIA The kwacha is expected to remain flat next week due to limited trading in the festive season. "We don't expect any change from the current levels because the volumes of trade are thin and there is not much economic data coming out," one trader said.
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