African currencies week ahead: Kenyan, Nigerian currencies set for more support

Central banks in Kenya and Nigeria are likely to keep supporting the shilling and the naira next week, while Tanzania, Ghana and Zambia's units are seen steady, dealers and analysts said.
KENYA: The shilling is expected to hover at three-year lows, with more cushioning from central bank intervention in the foreign exchange market. The bank has sold dollars for the past two weeks to support the currency. On Thursday, traders said the bank sold an undisclosed amount of dollars, which helped lift the shilling to a close of 90.05/15 to the dollar, compared with last Thursday's 90.25/35.
"I think it will be range-bound. Any dollar demand that is coming into the market will meet CBK (central bank) protection," African Banking Corporation trader, Julius Kiriinya, said. Traders see the shilling between 89.70 and 90.50 next week.
NIGERIA: The naira is seen under pressure next week after hitting a new low of 177.65 to the dollar on Thursday, though it recovered to close at 176.25 after central bank intervention. Traders said the naira is being depressed by concerns that the central bank might devalue it on the back of persistent pressure from offshore investors leaving local debt and equity markets. The naira has weakened 11.2 percent this year on concerns over the falling price of oil, triggering a broad sell-off.
TANZANIA: The shilling is seen stronger next week on expected hard currency inflows from companies converting dollars to pay salaries and taxes in the local currency. Commercial banks in east Africa's No 2 economy quoted the shilling unchanged at 1,730/1,740 to the dollar compared with last Thursday's close. TIB Development Bank dealer, Theopistar Mnale, said other than those inflows, "the central bank had been intervening by selling dollars to the market to try to prevent the local currency from further depreciation."
Market participants expected the shilling to trade in the 1,720-1,730 range over the coming days. The Bank of Tanzania said it had traded $29.75 million on the interbank foreign exchange market this week.
UGANDA: The shilling is forecast to trade weaker next week on dollar demand by foreign-owned firms that are due to repatriate annual earnings to parent companies. By 1055 GMT commercial banks were quoting the shilling at 2,739/2,749, stronger than last Thursday's close of 2,750/2,760.
Orient Bank chief dealer, Isaac Iga, said, "I see the shilling trading between 2,720-2,760 but this (dollar) demand will likely keep it on the (weaker) side."
GHANA: The cedi is expected to be stable for the remainder of 2014 on news that Ghana is close to securing aid from the International Monetary Fund (IMF), analysts said. The cedi slumped nearly 40 percent in the first half of this year, but has since recovered some of its losses largely on Eurobond and cocoa loan inflows, Finance Minister Seth Terkper said in his 2015 budget statement on Wednesday.
The cedi traded at 3.1500 to the dollar at 1300 GMT, from 3.1990 at the start of the trading day. It hit a record low of 3.8900 in July. "People are genuinely optimistic about the IMF talks with the hope that it would lead to a prudent fiscal management," Barclays Bank analyst Michael Akpakli said.
ZAMBIA: Bullish sentiment is expected around the kwacha next week on strong dollar inflows from foreign-owned companies preparing to pay wages and other end-of-month obligations in Africa's second-largest copper producer. The central bank's decision this week to raise the benchmark interest rate to 12.5 percent will add to upward momentum. By 1008 GMT, commercial banks quoted the currency at 6.3350 per dollar from 6.3500 a week ago.