Zambia's kwacha is expected to hold steady next week following a 17 percent plunge to a record low on Monday triggered by a sharp slide in copper prices and a ratings downgrade, while rising yields on government securities may help Kenya's shilling.
At 0855 GMT on Thursday, commercial banks quoted the currency of Africa's No 2 copper producer at 11.4500 per dollar, down from 10.6100 a week ago. "The kwacha should hold steady against the dollar ... with help coming from the central bank and today's Treasury bills auction," Zambia National Commercial Bank (ZANACO) said in a note.
"The liquidity crunch in the market and the government T-bills and government securities, which are providing very high yields, should attract offshore investors," said one senior dealer, adding the shilling could strengthen to below 104 to the dollar. Yields on Treasury bills soared at Wednesday's auction, rising above 20 percent on both 182-day and 364-day bills. Overnight lending rates also reached 27 percent this week, up from 13 percent in early September.
"The shilling will likely depreciate slightly against the dollar next week, or it could remain in the same levels if it receives support," said Nyanjula Selemani, a dealer at Commercial Bank of Africa Tanzania.
The currency traded at 222 to the dollar on the parallel market on Wednesday, slightly stronger than its close on the unofficial market on Tuesday, 224, but the same level as last week. On the interbank market, the naira closed at 196.50 to the dollar, from 197 a dollar last week. Thursday was a holiday. "With the continued support for the naira by the central bank, we don't see much change in the near term," one dealer said.
Nigeria's central bank has ruled out any plan to devalue the naira in the near term.