April 16, 2020 / 12:10 PM / 4 months ago

AFRICA-FX-Kenya's shilling seen under pressure next week

NAIROBI, April 16 (Reuters) - Kenya’s shilling is expected to come under pressure and Zambia’s kwacha and Uganda’s shilling to be range-bound over the coming week as the region grapples with the economic fall-out of the coronavirus outbreak.

ZAMBIA

The kwacha is likely to hold in a range against the U.S. dollar next week as market players sell hard currency for kwacha to settle their local obligations.

On Thursday, commercial banks quoted the currency of Africa’s second-largest copper producer at 18.5200 per dollar from a close of 18.6240 a week ago.

“Volumes have continued to slow down as business activity wanes,” the local branch of South Africa’s First National Bank (FNB) said in a note, referring to market activity.

UGANDA

The Ugandan shilling is seen trading in a narrow range over the next few days, drawing some support from the removal of excess liquidity by the central bank.

At 0945 GMT commercial banks quoted the shilling at 3,765/3,775, against last Thursday’s close of 3,780/3,790.

A trader at a leading commercial bank said the local currency would likely gain support from the Bank of Uganda’s removal of 804 billion Uganda shillings from the interbank money market via a repurchase agreement and a deposit auction.

“Some support will come from that (mop-up),” the trader said, adding that the local unit will likely hold in the 3,750-70 range against the U.S. currency in the coming days.

KENYA

The Kenyan shilling is seen coming under pressure in the coming week due to the coronavirus-related slowdown, with foreign currency inflows from diaspora remittances slowing and fewer offshore investors to meet dollar demand, traders said.

Commercial banks quoted the shilling at 106.00/20 per dollar, the same as last Thursday’s close.

“Every day we have more cases of coronavirus so business as usual will not resume,” said a senior trader from one commercial bank. “Offshore inflows are not coming in for investments, yet dollar demand is still there.”

NIGERIA

Nigeria’s naira is seen little changed next week on low demand as a government lockdown to slow the spread of the coronavirus exacerbates dollar shortages, traders said.

The naira traded at 387.65 per dollar in the over-the-counter market on Thursday on thin dollar liquidity. It eased to an intra-day low of 388 on the official market in the previous session but later recovered.

A lockdown in Nigeria aimed at curbing the spread of the coronavirus has worsened dollar shortages as the central bank operates a skeletal service and currency traders work from home. The lockdown was extended for a further 14 days on Monday.

Last month the central bank suspended forex sales to retail currency bureaus after the government banned entry to nationals from 13 countries with over 1,000 cases, and advised Nigerians to cancel or suspend traveling to these countries. (Reporting by Chris Mfula, Elias Biryabarema, Chijioke Ohuocha and John Ndiso; Compiled by Omar Mohammed; Editing by Jan Harvey)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below