June 11, 2020 / 12:34 PM / a month ago

WEEKAHEAD-AFRICA-FX-Kenyan currency seen under pressure, Uganda's firming

NAIROBI, June 11 (Reuters) - Kenya’s currency is next week expected to trade on the back foot against the U.S. dollar as Uganda’s firms and those of Nigeria, Tanzania and Zambia hold steady.

KENYA

The Kenyan shilling is seen under pressure in the coming week from oil importers and some multinational companies buying dollars to meet their monthly obligations, traders said.

At 0940 GMT, commercial banks quoted the shilling at 106.70/90 per dollar, compared with 106.00/20 at last Thursday’s close.

“There will be increased demand from mid month...Next week we expect to see oil importers making payments,” said a senior trader from one commercial bank.

UGANDA

The Ugandan shilling is expected to trade with a firming tone versus the dollar as mid-month tax payments trim demand by some importers.

At 0959 GMT commercial banks quoted the shilling at 3,730/3,740 against the dollar, compared to last Thursday’s close of 3,765/3,775.

“Demand will be minimal since we have tax payments, that will probably keep the local unit biased on the stronger side,” a commercial bank trader said.

NIGERIA

Nigeria’s naira is seen range-bound across markets next week, traders say, after the central bank last week revised the currency rate on the futures market amid dollar shortages plaguing the economy.

The naira opened at 387.50 against the dollar, a range at which it has traded since this month. On the official market, backed by the central bank, the naira was quoted at 361.

The central bank revised the settlement quote for the 5-year currency to 578.37 naira on Wednesday, just off a record low of 584.11 naira touched last week.

Dollar demand from investors and importers has ballooned on the interbank market with payment obligations accumulating amid hard currency shortages triggered by an oil price crash. This has funnelled demand to the black market, where the naira traded at around 450 on Thursday.

TANZANIA

Tanzania’s shilling is expected to hold steady next week, drawing support from improving economic activity as coronavirus restrictions gradually ease.

Commercial banks quoted the shilling at 2,309/2,319 on Thursday, the same levels recorded last week.

“We expect the impact of COVID-19 to start easing in upcoming weeks,” a trader at a leading commercial bank said, adding this would help the local currency.

ZAMBIA

The kwacha next week is likely to trade flat against the dollar due to reduced imports as disruptions in global supply chains caused by COVID-19 limit international trade.

On Thursday, commercial banks quoted the currency of Africa’s second largest copper producer at 18.2140 per dollar from a close of 18.1040 a week earlier.

“Should importer demand continue slowing down, the local unit is likely to remain flat in interim,” a local commercial bank, Cavmont, said in a note. (Reporting by John Ndiso, Elias Biryabarema, Chijioke Ohuocha, Nuzulack Dausen and Chris Mfula; Compiled by Chris Mfula; Editing by Mark Heinrich)

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