NAIROBI, April 30 (Reuters) - The Nigerian currency is expected to weaken against the dollar over the next week as the country prepares to begin easing its coronavirus lockdown while the Kenyan shilling is seen stable.
Nigeria’s naira is likely to weaken owing to a backlog of dollar demand as the central bank restarts forex sales to commercial banks ahead of the expected gradual easing of a coronavirus lockdown, traders said.
The naira this week hit a low of 460 against the dollar on the black market, before the central bank on Wednesday said it would sell $100 million per week to help individuals with dollar expenses abroad and importers revamp economic activities.
The bank last month suspended forex sales to retail currency traders due to the lockdown, causing forex demand to build up and piling pressure on the naira, traders say.
The currency of Africa’s largest economy was quoted at 388.84 naira per dollar on the over-the-counter spot market, mostly used by foreign investors and exporters.
Nigeria is expected to begin a gradual loosening the lockdown on May 4.
The Tanzania shilling is expected to hold steady amid a squeeze in demand caused by disruption from the coronavirus outbreak.
Commercial banks quoted the shilling at 2,309/19 on Thursday, unchanged from last week.
With parts of the economy shuttered to contain the spread of COVID-19, a trader in one of the commercial banks in the commercial capital Dar es Salaam said demand for hard currency was thin.
“COVID-19 has really disrupted businesses,” the trader said.
The Kenyan shilling is also seen holding steady as some traders eye possible inflows from the IMF and World Bank loans that Kenya is seeking to help combat the COVID-19 outbreak.
Commercial banks quoted the shilling at 107.20/40 per dollar, compared with 106.95/107.15 at last Thursday’s close.
“Markets have been depressed... we expect some support coming in because of COVID-19 to bring balance,” said a senior trader from one commercial bank, referring to the loans.
The Ugandan shilling is seen weakening as some foreign-owned firms buy hard currency to help pay dividends for last year.
At 1050 GMT commercial banks quoted the shilling at 3,790/3,800 compared to last Thursday’s close of 3,780/3,790.
A trader at a leading commercial bank said foreign-owned entities, especially commercial financial institutions and firms in sectors like manufacturing, were expected to start paying dividends next month.
“I see demand from such entities triggering some pressure on the local unit,” said a trader from a leading commercial bank, adding that the shilling would likely trade between 3,800-3,820.
The kwacha is likely to continue trading within current levels next week with limited market activity as the new month begins.
On Thursday, commercial banks quoted the currency of Africa’s second-largest copper producer at 18.6500 per dollar, down from a close of 18.4630 a week ago.
“There is likely to be little change, it should hold within the same band even going into next week,” independent financial analyst Maambo Hamaundu said. (Reporting by Chris Mfula, Elias Biryabarema, Chijioke Ohuocha, John Ndiso and Nuzulack Dausen; Elias Biryabarema; Editing by Kirsten Donovan)