NAIROBI, July 11 The Kenyan currency could come
under renewed pressure after the central bank warned that
instability in Egypt was a risk to the economy, while a shortage
of dollars may weaken Nigeria's Naira.
The Kenyan shilling may weaken further if the turmoil
in Egypt hits tea exports from the east African country and
pushes global crude prices higher.
The shilling has weakened 1.4 percent against the dollar
since July 3 to the 87.05/25 at 0956 GMT, in line with other
emerging market assets, on expectations that the U.S. Federal
Reserve will start to unwind its stimulus.
"Egypt unrest is a big factor going forward, that could hit
the shilling," said Duncan Kinuthia, head of trading at
Commercial Bank of Africa.
Kenya's central bank said, during a monetary policy meeting
on Tuesday that left its key lending rate unchanged, the unrest
could have repercussions on the oil price and tea exports, a big
foreign exchange earner.
The Nigerian naira could depreciate next week on
tightening dollar liquidity, after state-owned energy company
NNPC sold fewer-than-expected dollars on Wednesday.
The naira rose after NNPC sold about $350 million to some
lenders, but traders said the sum sold was below expectation and
insufficient to meet surging demand for dollars.
"We see the naira depreciating to around 162 to the dollar
in the near term as the market is not expecting any major dollar
flow for now, unless the central bank intervene to provide some
support for the naira," one dealer said.
The central bank had resumed a forward foreign exchange
auction to support the naira on Wednesday, but only one bank
bought $560,000 - not enough to move the market.
The Ugandan shilling is expected to firm, lifted by
inflows from commodity exports and slowing appetite for dollars
after the U.S. Federal Reserve tempered expectations of winding
down its stimulus programmes quickly.
Ahmed Kalule, trader at Bank of Africa, said the shilling's
relative weakness since mid last week was mainly due to
investors exiting risky assets.
"In the next few days the market is likely to see some gains
for the shilling as offshore demand (for dollars) wanes while
some commodity export bring in some inflows," he said.
Uganda's main exports are coffee, cotton, fish, and tea.
A market note from Centenary Bank said the local currency
was likely to swing in the 2,580/2,620 range.
The kwacha is expected to remain range bound against
the dollar with a likelihood of posting marginal gains as
corporates convert their dollars into kwacha to pay taxes.
At 0814 GMT on Thursday commercial banks quoted the kwacha at
4.455 per dollar from 5.480 a week ago.
The currency of Africa's top copper producer was expected to
appreciate in the medium term after the government introduced a
law allowing the central bank to monitor foreign exchange flows,
one commercial bank trader said.
Tanzania's shilling is expected to strengthen
slightly over the coming days due to a liquidity squeeze on the
local currency at the start of the new government fiscal year
Market participants said the shilling was expected to trade
in a tight 1,620-1,628 range over the coming days.
"The market is squeezed on Tanzanian shillings, since most
corporates are still winding up their positions due to the end
of the government's previous fiscal year on June 30 and the
start of the new fiscal year on July 1," said Hamisi Mwakibete,
head of trading at Commercial Bank of Africa Tanzania.
(Reporting by Kevin Mwanza, Fumbuka Ng'wanakilala, Elias
Biryabarema, Chris Mfula and Oludare Mayowa; Edting by Ron