African currencies week ahead: Zambia, Uganda currencies seen bearish, others stable

Zambian and Ugandan currencies are likely to trade on the back foot next week while those of Tanzania, Kenya and Nigeria are expected to hold steady.

ZAMBIA - The kwacha is likely to come under pressure next week, largely driven by sentiment after tax payments due this coming Monday.

On Thursday, commercial banks quoted the currency of Africa's second-largest copper producer at 14.6200 from a close of 14.7560 a week ago.

"With copper trading much lower, sentiment will naturally be bearish," the Zambian branch of South Africa's First National Bank (FNB) said in a note.

UGANDA - The Ugandan shilling is expected to weaken as some foreign-owned firms buy dollars as they prepare to pay last year's dividends.

Commercial banks quoted the shilling at 3,670/3,680, compared to last Thursday's close of 3,673/3,683.

"We anticipate that firms preparing to pay dividends will be buying hard currency starting this month," said a trader at a leading commercial bank.

"That demand pressure will likely weaken the local unit."

TANZANIA - Tanzania's shilling is expected to hold steady next week due to the balance between the supply of dollars and demand in the market. Commercial banks quoted the shilling at 2,305/15, the same levels recorded a week earlier.

"We expect the shilling to be more stable next week in the same levels as this week with supply of dollars matching the demand," a trader in one commercial bank in Dar es Salaam said.

KENYA - The Kenyan shilling is seen stable in the coming week with inflows from remittances and offshore investors buying government paper matching dollar demand from merchandise importers, traders said.

Commercial banks quoted the shilling at 100.30/50 per dollar, compared with 100.55/75 at last Thursday's close.

"Market looks well balanced, demand and supply are well matched ... a lot of importers are holding off because they think the shilling might strengthen further," said a senior trader from one commercial bank.

NIGERIA - Nigeria's naira is seen stable next week after it eased due to scarce US dollar inflows as weak sentiment worsened by fears that the coronavirus outbreak would hit Chinese demand, traders said.

The naira eased to around 364 per dollar on the over-the-counter market, a level it traded since last week. The currency was quoted at 361 just before the effects of the virus outbreak hit the local market.

Traders said the market has been on bid with little supply as central bank treasury auctions designed to attract foreign investors fail to lift dollar liquidity. The bank has been helping to meet some demand, keeping the naira stable. "There's risk aversion following the impact of coronavirus on oil prices. This is not a plus for us at this time," one trader said.