AFRICA FX - Kenya shilling to gain, Nigeria's naira seen stable

NAIROBI: Kenya's shilling is expected to gain against the dollar in the next week to Thursday, while Tanzanian, Ugandan and Nigerian currencies are seen holding steady, traders said.

KENYA

The Kenyan shilling is expected to rally, buoyed by higher dollar inflows from offshore investors into the local debt market and improved risk sentiment for so-called frontier assets.

At 0700 GMT, commercial banks posted the shilling stronger at 109.75/95 versus 110/110.20 last Thursday. Traders said a Treasury bond auction had been met by high demand from foreign investors.

"It will relieve some of the pressure on the currency for the time being," said a senior trader at a commercial bank, adding that a planned US economic stimulus package was boosting appetite for emerging-market assets.

The gains will, however, be capped by demand for dollars from importers and any moves by the central bank to buy dollars from the bank to shore up its reserves, the trader warned.

TANZANIA

Tanzania's shilling is expected to hold steady as dollar inflows from the mining sector balance demand from the energy and manufacturing sectors.

Commercial banks quoted the shilling at 2,314/2,324 against the dollar, the same as last Thursday's close.

"The demand is highly likely to remain the same from oil and manufacturing importers, but we expect inflows from mining activities to match the demand," a trader at one commercial bank in Dar es Salaam said. Reuters

UGANDA

The Ugandan shilling is seen trading in a stable range in the coming days as easing political risks following last week's elections support positive market sentiment.

Commercial banks quoted the shilling at 3,680/3,690, compared with last Wednesday's close of 3,705/3,715.

Markets were closed on Thursday last week for a holiday in Uganda.

"I think ahead of the election there was elevated fear of what may happen, or call it uncertainty, but I think that fear is now dissipating," said a trader at one of the commercial banks.

Incumbent President Yoweri Museveni was declared by the country's poll body as winner of last Thursday's election with 59% of the vote against his rival Bobi Wine, who got 35%.

NIGERIA

The naira is seen flat in the coming week as traders watch for policy details at the central bank's first rate-setting meeting of the year.

The naira opened at 394.16 on the over-the-counter spot market on Thursday, compared with 475 naira on the black market.

The currency has been under pressure on the black market, where it trades more freely, widening the gap with the official rate and prompting calls from the World Bank for Nigeria to unify rates to attract inflow.

The central bank will hold its first interest rate meeting for 2021 on Monday and Tuesday next week.

The naira is quoted at 381 to the dollar on the official market, a level set in July and backed by the central bank.