Uganda's shilling looks set to plumb new record lows against the dollar over the next week due to soaring foreign exchange demand from the oil sector, while Kenya's unit should strengthen slightly.
UGANDA Uganda's shilling continued its five-month slide to hit a life-time low of 2,347 to the dollar on Thursday due to strong foreign exchange demand from the country's nascent oil sector. The depreciation was likely to accelerate, possibly hitting 2,400 by the end of the month - barring central bank intervention - due to a fundamental shortage of dollars in the country, traders said.
The shilling lost more than 20 percent against the dollar in 2010, hitting a record low of 2,337 on the final day of the year, despite external investor interest in its relatively high-yielding domestic debt.
KENYA The Kenyan shilling is likely to firm against the dollar, buoyed by the central bank's absence from the market and a firm supply of dollars from farm exports. Traders said the shilling was likely to stay in a range of 80.60-81.10 with a firming bias. It was at 80.85 on Thursday, up from last week's 81.1 close.
The Central Bank of Kenya (CBK) has not bought any hard currency this year, suggesting it has happy for the unit to strengthen from a 3-1/2-month low of 81.25 touched last week.
TANZANIA Tanzania's shilling lost ground against the dollar on Thursday due to strong oil sector and interbank demand for dollars and traders forecast more weakness in coming days. The unit was at 1,485 to the dollar compared with 1,469 a week ago.
NIGERIA The naira remained weak against the dollar at both the interbank market and official window on Thursday due to short supply of the greenback and traders said it was likely to continue to depreciate. It eased to 153.60 to the dollar in early trade at the interbank market on Thursday from 153.20 on Wednesday due to tight dollar supply.
ZAMBIA The kwacha is expected to firm due to rising demand for the local unit as foreign companies convert to the currency of Africa's largest copper producer to pay corporate taxes due on Friday. The kwacha was at 4,715 to the dollar on Thursday versus 4,730 a week ago. The unit met firm resistance around 4,600 during 2010. On the few occasions it broached that level, it tested but failed to breach 4,550.
GHANA Expectations of a 3-year government bond issue, open to foreigners, should support the cedi in a 1.48-49 range against the dollar, despite letters of credit falling due in the first quarter exerting mild pressure on the unit, traders said.
"During the festive season a lot of companies signed letters of credit so we have a situation whereby supply and demand pressure put the cedi on the downside. We are going to see mild depreciation pressures again next week," said Dataabank analyst Sampson Akligoh "This week there will be no off-shore inflows. They are waiting for the three-year bond to be issued and then they will bring in funds, but so far we haven't heard any news about it so it's calm," she said.