The Ugandan shilling could weaken on dollar demand by firms seeking to pay local taxes, while the Zambian kwacha could wilt on reduced copper export earnings, traders said. Most African currencies are likely to take a hit on the expected US Federal Reserve rate hike.
At 0730 GMT on Thursday, commercial banks quoted the currency at 10.8200 per dollar from 10.6277 a week ago. "Dollar supply is very limited and this will continue putting pressure on the kwacha," analyst Maambo Hamaundu said.
"The outlook is that the shilling will likely appreciate to 2,150-2,160 levels next week. A lot of customers are selling dollars to cover their positions and pay taxes in shillings before the year ends," said Hakim Sheikh, a dealer at Commercial Bank of Africa Tanzania.
One trader said he expected the shilling to stay in a range of about 101.50 to 102.00 next week, while another suggested a range of about 101.80 to 101.30. Dealers said the central bank could issue a tap on a nine-year, government infrastructure bond after the initial auction on December 9 received bids worth just 55 percent of the value offered. The poor subscription level suggested lower offshore interest, but the tap could boost dollar inflows, they said.
The local currency has been steady in the fourth quarter after slumping nearly 30 percent in the first half of the year. It was trading at 3.83 to the greenback at 1100 GMT on Thursday, slightly down from 3.81 a week ago. "Individuals especially, and some firms would be tempted to buy and hold dollars to guard against exchange rate uncertainty early next year," said analyst Joseph Biggles Amponsah of the Accra-based Dortis Research.
Barclays Bank Ghana said in its market report on Thursday that the cedi could trade within the 3.8300-3.8400 range to the dollar in the coming weeks.
The naira weakened further in the parallel market on Thursday, trading at 253 to the dollar versus 246 last week. The currency traded at 198.97 to the dollar on the interbank market, near a rate at which it has been pegged since February. The local currency had weakened on the unofficial market on Wednesday on reduced dollar supply to the foreign exchange bureau operators due to lack of the relevant documentation.
"We are in contact with the central bank to resolve issues around the exclusion of some of our members from the forex sales and we are expecting positive response," said Aminu Gwadabe, president of Nigeria's bureau de change association.