African currencies week ahead: Nigeria's central bank seen keeping up support for Naira

The battered Nigerian naira is likely to trade within a tight range next week, sustained by dollar flows from oil companies and intervention by the central bank. Kenya's shilling is expected to come under renewed pressure, though central bank interventions and dwindling dollar demand before the holiday season will ease some of the pressure.
NIGERIA: The local currency traded at 182.12 to the dollar on Friday, compared with 180.10 last week. "Strong demand for the dollar from some offshore investors selling down their positions on the equity market has continued to exert pressure, but regular intervention by the central bank has been able to provide some level of support for the naira," one dealer said.
State-owned energy company NNPC sold about $200 million to some lenders on Wednesday, helping reduce the volatility in the market. "The central bank will want to keep the exchange rate at a relatively stable level towards the close of the financial year," another dealer said.
KENYA: The shilling hit a three-year low on Thursday and traded around 90.35/75 per dollar on Friday, weaker than 90.25/35 last week. Traders say the shilling may come under renewed pressure next week as hard currency inflows have been scant, especially from the tourism sector which has been dented by Islamist attacks.
"We expect the shilling to actually test 91," said Joshua Anene, a trader at Commercial Bank of Africa. However, central bank draining of liquidity and even direct dollar sales to the market should ease the pressure on the shilling in coming days, said I&M trader Eric Gathecha said. He added that dollar demand should start easing off towards the middle of December as companies close for the year, which should also help the shilling.
UGANDA: The Ugandan shilling is forecast to trade stable over the next one week, although the central bank's liquidity mop-ups and sluggish corporate demand are likely to give it a bullish bias. The unit was at 2,764/2,773 in early Friday trade, compared with around 2,757/2,767 last week. "Demand from corporates will likely remain flat in the days toward Christmas," said Faisal Bukenya, head of market making at Barclays Bank. "It (shilling) could also be supported by the liquidity mop-up but overall I see a range bound shilling unit."
He said the shilling would likely oscillate in the 2,750-2,770 range over the next few days. On Thursday the central Bank of Uganda removed a total of 112 billion shillings ($40.61 million) worth of excess liquidity via seven-day repo, the third this week.
TANZANIA: The Tanzanian shilling is expected to strengthen slightly against the dollar in the days ahead, buoyed by a slowdown in demand for the US currency before the holidays and inflows from the agriculture sector. "We expect the shilling to appreciate against the US dollar next week. This is mostly due to the prevailing weak demand as most firms prepare to shut down for the year-end holidays," said Theopistar Mnale, a dealer at TIB Development Bank.
"The local currency has also been getting some support from the agriculture sector, particularly cashew nut exports, while the central bank has also been selling dollars." Market participants expected the shilling to trade in the 1,720-1,730 range over the coming days. The Bank of Tanzania said on its website it had traded $37.25 million on the interbank foreign exchange market over the past week.
ZAMBIA: The kwacha is likely to hold steady against the dollar supported by a treasury bill auction and easing demand for the greenback. "We expect the kwacha to hold and trade within this same range between 6.3000 and 6.4000," one commercial bank trader said. Investors will be keeping a close eye on Africa's second largest copper producer before a presidential election on January 20 following the death in October of leader Michael Sata.