Kenya's shilling is seen under pressure from market concerns about a legal challenge to this month's presidential election and routine end-month dollar demand, while central bank interventions are seen keeping Nigeria's naira rangebound.
The shilling has been rangebound between 85.00-86.00 since defeated candidate Raila Odinga, the country's prime minister, challenged the result of a broadly peaceful March 4 vote. Commercial banks quoted the shilling at 85.70/80 per dollar, weaker than last Thursday's 85.30/50 close. "There might be a little bit of demand from importers but the shilling might not cross 86," said Jeremiah Kendagor, head of trading at Kenya Commercial Bank.
The Ugandan shilling is seen on the back foot against the dollar this week due to end-month demand for hard currency from manufacturers and fuel importers. Commercial banks quoted the shilling 2,625/2,635, stronger than last Thursday's close of 2,640/2,650.
"We're likely to get some demand from manufacturers since we're moving close to the end of the month so I see scope for some depreciation of the shilling," said Shahzad Kamaluddin, trader at Crane Bank. The shilling, which is up 2.3 percent versus the dollar this year is supported in the short term by high borrowing costs. The Tanzanian shilling might firm slightly against the dollar in the days ahead as companies convert greenbacks into the local currency to pay taxes.
Traders quoted the shilling at 1,617/1,627 to the dollar on Thursday, stronger than the 1,625/1,630 level of last week. "The local currency will likely stay at the same levels or could appreciate slightly against the dollar in the days ahead because customers are changing dollars into shillings to settle tax obligation as we approach the quarter end," said Fred Siwali, a dealer at CRDB Bank.
The naira is seen rangebound against the dollar, said traders who expect the central bank to intervene and tame any volatility due to anticipated dollar sales by oil companies. The naira traded at 158.95 to the dollar on the interbank market on Thursday, weaker than the 158.80 it closed at the previous day.
"The market opened lower this morning because of strong dollar demand, but fear of a likely central bank intervention kept the market in check," one dealer said. Waning offshore interest in local debt has dampened the flow of dollars into the market, weighing on the naira. Ghana's cedi will stay under pressure next week on unmet dollar-craving by local firms for their imports and seasonal repatriation of funds by multinationals, analysts said.
The local unit slumped to a seven-month low on Wednesday at 1.9400 against the dollar, mainly on end-of-quarter corporate demand for the greenback amid weak supply. Market players said the local currency could slide further to touch the 1.9500 levels. Economic woes in the euro zone may dampen appetite for emerging market currencies as investors run to the dollar, keeping Zambia's kwacha under pressure, traders said. Commercial banks quoted the currency of Africa's top copper producer at 5.380 per dollar, matching last week. Big falls beyond 5.400 were likely to be challenged by the central bank, one trader said.