WEEKAHEAD-AFRICA-FX-Zambian, Kenyan and Nigerian currencies expected to ease - REUTERS
NOVEMBER 25, 2021
LUSAKA, Nov 25 (Reuters) - The Zambian, Kenyan and Nigerian currencies are expected to ease versus the U.S. dollar in the coming week as Uganda's firms and Tanzania's holds steady.
The Nigerian naira is expected to ease on the black market in the coming week after the currency fell sharply on the spot market at Thursday's intra-day session, traders said.
The currency eased 8.5% against the dollar to 449.25 naira on the spot market on Thursday. It later firmed to 411.75 naira but remained weaker on the black market, where it trades more freely, at 565 naira against the dollar.
"The inflows that came into the market is drying up and demand is resurging," one trader said, adding that the central bank is intervening to keep the official rate stable.
On Tuesday, the World Bank urged the central bank to improve its exchange-rate management, in order to speed up other reforms. The naira's black market premium was fuelling inflation, it said.
The kwacha is likely to remain on the back foot against the dollar next week due to the tight supply of hard currency amid high demand despite this week's monetary policy tightening.
On Thursday, commercial banks quoted the currency of Africa's second largest copper producer at 17.7200 per dollar from 17.5700 at the close of business a week ago.
"We expect the Kwacha to remain on a weakening path next week and is likely to close the week in the range ZMW 17.80-17.85/$," Zambia National Commercial Bank (ZANACO) said.
Zambia's central bank raised interest rates by 50 basis points to 9.0% to help bring down stubbornly high inflation, with price rises only seen falling back within the bank's target range in 2023, Governor Denny Kalyalya said on Wednesday.
The Kenyan shilling is expected to trade with a weakening bias amid elevated demand for dollars meeting with insufficient supplies.
Commercial banks quoted the shilling at 112.30/50, compared with last Thursday's close of 112.05/25
"There are some inflows from charities, remittances and commodities but they are not sufficient to meet existing demand," a trader at a commercial bank said. Most of the demand was from energy importers.
The Ugandan shilling is forecast to firm on the back of typical month-end dollar inflows from exporters of commodities.
Commercial banks quoted the shilling at 3,555/3,565, compared with last Thursday's close of 3,570/3,580.
"The local unit might post some gains but overall I anticipate they will be modest," said a Kampala-based independent foreign exchange trader who added he expected most of the inflows from exports of commodities like tea, coffee and others.
Tanzania's shilling is expected to hold steady, with inflows from investors and agricultural exports matching with demand from the manufacturing and energy sectors.
Commercial banks quoted the shilling at 2,294/2,310 on Thursday, unchanged from last week's close.
"We expect a stable shilling over the coming days as demand for dollars from the manufacturing and energy sectors is matched by inflows from investors and agricultural exports," Terry Karanja, a treasury associate at AZA, a Nairobi-based FX firm, said. (Reporting by Chris Mfula, Elias Biryabarema and Nuzulack Dausen, Editing by Angus MacSwan)