NAIROBI Jan 17 The Kenyan shilling and
Tanzanian currencies could weaken in the next week to Thursday
pressured lower by oil importers buying dollars next week, while
the Ugandan, Zambian and Nigeria units could firm on offshore
A surge of demand for dollars by oil importers could weigh
on the Kenyan shilling which is already 0.8 percent
weaker in the year-to-date at 86.70/90 to the dollar at 0933
GMT, weaker than last Thursday's close of 86.60/80.
"There is some energy dollar demand. Political risk is also
being factored in the market," said John Muli, a trader at
African Banking Corporation, referring to concern over violence
that could erupt from ongoing primaries by political parties.
The parties are nominating candidates for parliamentary,
civic and regional polls due to be held alongside a presidential
vote on March 4.
The elections will be the first to be held in east Africa's
biggest economy since 2007 when President Mwai Kibaki won a
second term in office amid opposition accusations the vote was
stolen, prompting deadly nationwide violence.
The Tanzanian shilling is likely to depreciate next
week due to a resurgence of demand for dollars from the oil
sector amid declining inflows, traders said.
Commercial banks in east Africa's second-biggest economy
quoted the shilling at 1,600/1,610 to the dollar on Thursday,
slightly weaker than 1,598/1,608 last Thursday.
"Going forward we think the shilling will depreciate a bit
next week ... mainly due to demand for the U.S. currency in the
market, especially from the oil sector," said Hamisi Mwakibete,
head of trading at Commercial Bank of Africa Tanzania.
The local currency is mainly supported by the central bank,
which has regularly sold hard currencies to prevent the shilling
from sliding steeply against the dollar.
Traders said they expect the shilling to trade in the
1,610-1,620 range in the days ahead.
"Without the central bank's intervention, the shilling would
be trading at 1,620 levels at the moment because the local
currency usually depreciates sharply at the start of the year,"
said a dealer at one commercial bank.
The Ugandan shilling is forecast to firm slightly
underpinned by tight liquidity and expectations of dollar
inflows from offshore investors buying Treasury debt.
At 1021 GMT, commercial banks quoted the currency of east
Africa's third-largest economy at 2,660/2,670, stronger than
last Thursday's close of 2,695/2,705.
The shilling, which is about 1 percent stronger the
year-to-date, has been helped by commercial banks selling
dollars and inflows from aid agencies. The currency had
plummeted to a 14-month low of 2,715/2,725 on Jan 7.
"If a significant amount of inflows come through from
offshore investors interested in the auction then I see the
shilling remaining supported at current levels," said Shahzad
Kamaluddin, trader at Crane Bank.
The Bank of Uganda is scheduled to sell 100 billion
shillings ($37.52 million) worth of Treasury bills of all
maturities next Wednesday.
The Zambian kwacha is expected to firm due to
increased dollar inflows and positive global economic growth
data supportive of emerging market currencies.
The currency of Africa's leading copper producer was at
5.260 per dollar in early afternoon trading on Thursday, almost
the same as last week when it traded at 5.250.
"We have experienced good dollar supply in the last two days
and that has helped the kwacha," a commercial bank trader said.
"Going into next week the numbers on global economic growth
are very encouraging for all emerging market currencies
including the kwacha."
Zambia introduced a rebased currency by dropping off three
zeros from Jan. 1 2013, and will cease using the old notes in
ordinary transactions by June this year.
Nigeria's naira is seen strengthening against the
U.S dollar next week on expected dollar flows from offshore
investors buying local debt, and energy companies selling hard
currency to obtain the naira for their domestic use.
The local currency was trading at 157.20 to the dollar at
1020 GMT, firmer than the 157.25 it closed at the previous day.
The naira surged to a five-and-a-half month high of 156.08
against the U.S dollar on the interbank market last week, a rate
better than the effective central bank rate, triggering
increased dollar demand by importers.
Traders said the naira should trade below the 157 mark to
the dollar next week when more dollars could flow in from
offshore investors buying treasury bills and bonds at an auction
"We expect to see more dollar flows from offshore investors
and energy companies next week, so the naira should strengthen
to around 156.80-157 middle of next week," one dealer said.
($1 = 2665.0000 Ugandan shillings)
(Reporting by Kevin Mwanza, Fumbuka Ng'wanakilala, Elias
Biryabarema, Chris Mfula and Oludare Mayowa; Editing by James
Macharia, Ron Askew)