JOHANNESBURG Aug 7 Kenya's shilling is
expected to hold steady against the dollar next week even if the
central bank intervenes as expected to ease a liquidity crunch
in the local money market through reverse repurchase agreements.
Dollars flows from state oil firm NNPC should prop up
At 1014 GMT on Thursday, commercial banks quoted the
currency of East Africa's biggest economy at 87.70/90 to the
dollar, little changed from a week ago.
"Next week is dependent mostly on the central bank's actions
in the market," Commercial Bank of Africa trader John Njenga
"There is no clear direction in the interest rates ... so
monetary action will play a big part in how the shilling is
going to trade."
A liquidity squeeze in the money market has pushed overnight
interbank lending rates higher in the past week.
The weighted average lending rate rose to 11.4557 percent on
Wednesday from 10.7589 percent a day earlier, with volumes
borrowed falling to 7.52 billion Kenyan shillings ($86 million)
from 15.48 billion shillings.
The Ugandan shilling will probably hold steady, with
scope to edge firmer as higher rates on government debt buoy
demand for the local currency.
At 1019 GMT commercial banks quoted the shilling at
2,615/2,625 to the greenback, stronger than last Thursday's
close of 2,618/2,628.
"The market is a bit deadlocked in a stable range ... but
the consistent rise in yields should give the shilling a firming
bias," said Ahmed Kalule, a trader at Bank of Africa.
Traders expected Zambia's kwacha to extend losses
against the dollar. Commercial banks quoted the currency at
6.155 on Thursday, down from 6.120 last week.
"The trading range should remain between 6.1000 and 6.2000
in the near term," one dealer said.
Traders said month-end dollar injections by some oil
companies had boosted the naira over the past three weeks, but
the flows had since ceased.
"Some importers are bringing forward their obligations to
benefit from a recent gain by the naira, while some banks are
covering their short dollar positions," one dealer said.
The local currency was softer at 162.75/dollar by 1400 GMT,
after ending the previous trading session at 161.65.
"NNPC's sale should help the currency stay within a
reasonable band around its current levels," Citibank said in a
research note to clients.
(Reporting by George Obulutsa, Chris Mfula and Oludare Mayowa;
Editing by Stella Mapenzauswa and Susan Fenton)