(Adds Nigeria currency outlook)
NAIROBI, March 27 The Kenyan shilling and Ghana
cedi are expected to weaken next week on dollar demand from
importers, but the Uganda shilling and Zambia's kwacha are
expected to firm on interbank selling and conversions into local
currencies to pay taxes.
The Kenyan shilling is expected to be under pressure
in the next week as importers, mainly from the energy sector,
buy dollars to meet their month-end obligations.
Commercial banks quoted the shilling at 86.65/75 against the
dollar, down slightly from last Thursday's close of 86.45/60.
Traders said it was likely to trade in a band of 86.50-87.00.
"My expected direction from here is for a weaker shilling
towards 87 as we head into dividend season," said a trader at a
commercial bank, referring to additional dollar demand from
companies looking to pay dividends to their foreign
The central bank has mopped up liquidity from the market
several times this month after overnight borrowing rates
tumbled, exposing the shilling to weakness from banks funding
long dollar positions.
Nigeria's naira is expected to trade within a
narrow band next week after the central bank tightened
The naira was stable at 164.90 to the dollar on Thursday in
thin trade, unchanged from the previous day's close.
Traders said a unit of oil company Chevron sold
about $55 million to some lenders on Thursday, boosting
liquidity in the market.
The central bank kept interest rates on hold for the 15th
time in a row on Tuesday but hiked its cash reserves requirement
on private sector deposits by 300 basis points to 15 percent.
On Wednesday, Godwin Emefiele was confirmed central bank
governor designate by parliament and he said he would sustain
support for the naira, according to local media. Traders said
this would calm the market and reduce pressure on the local
"We expect stability in the market around the present band
of 164.60-165 to the dollar, as we digest both the monetary
policy decision and the pronouncement of the central bank
governor designate," one dealer said.
Month-end dollar sales by oil companies could also provide
support for the naira around the present band.
The Ugandan shilling was forecast to trade stronger
over the next week, helped by soft corporate dollar demand and
month-end dollar inflows from charities.
At 0851 GMT commercial banks quoted the currency of east
Africa's third-largest economy at 2,540/2,550, weaker than last
Thursday's close of 2,535/2,545
"Since demand from corporates is scarce I think some players
will have to cut back on their dollar positions ... we're likely
to see a bit of selling in the interbank," said Peter Mboowa,
trader at KCB Uganda.
He predicted the shilling would oscillate between 2,520 and
2,560 over the next week though biased towards the stronger
Charities typically convert dollars at the end of the month
for shillings to pay for salaries and meet other operational
The Tanzanian shilling is expected to be stable to slightly
stronger against the dollar next week, supported by U.S.
currency inflows from corporates.
Commercial banks in east Africa's second-biggest economy
quoted the shilling at 1,632/1,642 to the dollar on Thursday,
stronger than 1,639/1,644 a week ago.
"The shilling will likely remain range-bound at current
levels next week ... Some corporate clients have been offloading
dollars at the end of the quarter to meet tax obligations and
pay salaries," said Theopistar Mnale, a trader at Tanzania
Market participants said they expect the shilling to trade
in the 1,630-1,640 range over the coming days.
The central Bank of Tanzania said on its website that it
traded $47.32 million on the interbank market over the past
Ghana's cedi could decline marginally next week on
unmet dollar demand from local companies and moves by the
central bank to correct its rates to reflect interbank price
fluctuations, traders said.
The cedi, which has depreciated by around 12 percent since
January, was quoted at 2.6700/2.6800 to the dollar by 1250 GMT
on Thursday, down from the previous day's close of 2.6550.
Ghana's interbank market reopened active trading last week
after more than six months of inactivity due to lack of
"It's easier now to see where actual rates are, so the
central bank needed to react quickly to raise its numbers to the
levels of the market," Stanbic Bank Ghana's Chris Nettey said.
The cedi was expected to weaken "slightly" next week, he said.
He said the central bank has been selling dollars to
commercial banks to boost the availability of dollars in the
The government last week cancelled a planned five-year bond
auction slated for this month to avoid a spike in already high
yields. It earlier announced it had put a hold on a $1 billion
Eurobond slated for this year.
Analyst Yaw Adu-Koranteng of the Accra-based NDK Asset
Management firm said the cancellation of the five-year bond
would starve the market of expected liquidity and lead to
further weakening of the cedi to hit the 2.700 band.
The kwacha is expected to firm next week as
businesses convert dollars into local currency in order to pay
taxes and other month-end obligations.
At 1309 GMT on Thursday, commercial banks quoted the
currency of one of Africa's leading copper producers at 6.4100
per dollar, down from 6.2700 per dollar a week ago but traders
said it was likely to recover.
"Provisional taxes are due at the end of the month which
will result in conversions from foreign currencies to kwacha.
This is expected to give support to the local unit," First
National Bank said in a market note.
Zambia last week revoked 2012 and 2013 regulations that
required domestic transactions to be quoted and paid for in
kwacha and gave the central bank authority to monitor foreign
(Reporting by Duncan Miriri, Elias Biryabarema, Fumbuka
Ng'wanakilala, Oludare Mayowa, Kwasi Kpodo and Chris Mfula;
Editing by James Macharia and Susan Fenton)