African currencies week ahead: Kenyan shilling, Zambia kwacha seen as vulnerable

The Kenyan shilling is seen as vulnerable in the coming week following a sharp fall in government debt yields, while Zambia's kwacha is expected to remain on the back foot as the price of its major export, copper, remains low.
KENYA: The shilling is seen weakening in the next week, with the local currency seen vulnerable to further losses due to loosening liquidity following a sharp fall in government debt yields. Commercial banks quoted the shilling at 102.15/25 to the dollar, compared with last Thursday's close of 101.80/90. "T-bill yields are the driver in the market," said one Nairobi-based trader.
But in auctions this week, the yield on the 182-day bill fell to 16.492 percent from 21.028 percent a week ago, while the yield on the 364-day bill dropped to 17.130 percent from 21.212 percent. The yield on the 91-day bill plummeted to 13.763 percent, compared to 19.471 percent at last week's sale.
ZAMBIA: The kwacha is expected to remain on the back foot against the dollar next week as the price of its major export, copper remains low and due to risk aversion by investors as the US prepares to possibly hike interest rates. At 0720 GMT, commercial banks quoted the currency of Africa's No 2 copper producer at 12.6700 per dollar, weaker than a close of 12.5700 a week ago.
"We still see a weak kwacha going into next week. Copper prices remain low at $5,100 per tonne. Yields are rising on the domestic market but this effect has been countered by the anticipated hiking of rates in the US," BancABC Zambia head of Treasury John Mapiye said.
UGANDA: The shilling is forecast to post gains over the next week, helped by the central bank's tight policy stance that has been fuelling an interbank sell-off of greenbacks. At 1121 GMT commercial banks quoted the shilling at 3,410/3,420, stronger than last Thursday's close of 3,560/3,570. "I think in this policy environment we'll continue to see banks drastically cutting back on their greenback holdings," said a trader at leading commercial bank. He said the shilling would likely to strengthen to touch 3,370.
Bank of Uganda has tightened its policy stance this year by raising its benchmark rate by a total of 600 basis points to 17 percent and market players are expecting a possible further hike on December amidst a surge in consumer prices.
NIGERIA: The naira is seen depreciating on the parallel market in the coming week after plans by the central bank to enforce improved disclosure by owners of bureaux de change and check money laundering met some resistance. The local currency weakened to 232 to the dollar at the parallel market on Thursday, compared with 225 a dollar last week and trading at 197.48 a dollar on the interbank market against 198.97 a dollar previous week.
Nigeria's central bank had directed bureau de change operators to demand details of a biometric Bank Verification Number (BVN) before selling dollars to them. "Most customers are not comfortable giving out their BVN before purchasing dollars from us and therefore preferred to patronise black market for dollars, pushing down the value of the naira," Aminu Gwadabe president of the bureau de change operators said. The BVN is meant to verify the identity of bank's customer and reduce fraud.
GHANA: The cedi is expected to remain stable in the coming week on consistent central bank dollar supplies to match market demands, analysts said. The local currency rebounded in July after slumping nearly 30 percent in the first half of the year. It rallied to 3.6700 1015 GMT on Thursday, compared with 3.8000 a week ago, according to Thomson Reuters data.
"For the past few weeks, it's been good. There's been regular supply of dollars on the market and the cedi is expected to remain stable in the weeks ahead as well," said Joseph Amponsah of Dortis Research in Accra.
TANZANIA: The shilling is expected to remain steady or strengthen slightly in the days ahead due to a slowdown in demand from importers. Commercial banks in the capital Dar es Salaam quoted the shilling at 2,155/2,165 on Wednesday, stronger than 2,170/2,180 a week ago. "There isn't much activity in the market. We don't expect to see significant demand for dollars until mid November," said Sameer Remtullah, a trader at CBA Bank Tanzania.