The Nigerian naira is expected to remain steady on the back of sustained dollar sales by the central bank, while the Kenyan shilling is expected to trade within a narrow band due to tight liquidity in the markets.
NAIRA Nigeria's central bank has increased its frequency of dollar sales to bureau de change operators from once to twice-weekly since last week, raising support for the naira. The local currency was trading around 221 to the dollar at the parallel market, weaker than 218 a dollar a week ago. The naira was unchanged at the official interbank market at 197 to the dollar, where the central bank has maintained a tight control by pegging it to the rate of 197 to the dollar. "We expect that the increase dollar liquidity at the bureau de change market and the tightening of the noose around dollar cash transfers across the board should help strengthen the local currency in the near term," one dealer said.
KENYA The shilling is expected to trade within a narrow band due to tight liquidity in the money markets that has been making it expensive for traders to bet against the currency. Commercial banks posted the shilling at 101.70/80 per dollar in early trading on Thursday from 101.10/30 a week ago and market participants said it was likely to trade in a range of 100.75-101.75 over the coming week. "The only thing that is supporting the shilling is tightness in the markets," said a trader at a commercial bank.
Overnight rates have soared to a high of 26 percent on the interbank market this week, supporting the shilling.
TANZANIA The shilling is expected to come under pressure on dollar demand from the energy and manufacturing sectors. Commercial banks quoted the shilling at 2,130/2,140 to the dollar on Thursday, weaker than 2,100/2,110 a week ago. "We expect to see some pressure on the shilling next week due to demand from oil, trading and manufacturing companies. The central bank has been in the market to sell dollars, but demand still outweighs supplies," said Sameer Remtulla, a dealer at Commercial Bank of Africa Tanzania.
UGANDA The shilling is forecast to trade in a stable range, and mid-month domestic tax payments using local currency are expected to tighten liquidity and support the local currency. At 0936 GMT commercial banks quoted the shilling at 3,540/3,550, weaker than last Thursday's close of 3,510/3,520.
"Tax payments will be taking out a lot of liquidity that would otherwise fund demand ... that could offer support," said a trader from leading commercial bank, adding that the shilling was seen trading in the 3,530-3,570 range.
GHANA Ghana's cedi could remain under pressure as dollar demand remains unmatched by inflows of the US currency. The local unit rallied strongly last month after slumping 25 percent in the first half of the year but has since lost all the gains. It traded at 4.000 to the greenback at 1100 GMT on Thursday, down 29 percent since January, according Reuters data.
"In the absence of any significant dollar supply to the market, we expect further losses for the local currency, fuelled by corporate demand in the week ahead, albeit marginal," Joseph Biggles Amponsah, currency analyst at Dortis Research said. President John Dramani said on Wednesday the recent weakening of the cedi was a process of the unit finding its "correct level" after last month's sharp rally.
ZAMBIA The kwacha will likely be on the back foot after China, the world's top copper consumer, devalued its currency on Tuesday, roiling global financial markets and dragging other Asian currencies to multi-year lows. At 0807 GMT on Thursday, commercial banks quoted the currency of Africa's second-largest copper producer at 7.8350 per dollar, unchanged from a week ago. "The negative sentiments include problems in China and tumbling oil prices," an analyst at South Africa's First National Bank (FNB) said.
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