May 3, 2018 / 1:22 PM / 6 months ago

WEEKAHEAD-AFRICA-FX-Kenya's shilling to hold steady, kwacha to ease

NAIROBI, May 3 (Reuters) - Kenya’s shilling is expected to hold steady against the dollar in the next week to Thursday, while Zambia’s kwacha is forecast to weaken, traders said.

KENYA

The Kenyan shilling is expected to trade in a tight range as dollar inflows from horticulture exports and offshore investors are likely to meet dollar demand from the energy and manufacturing sector, traders said.

Commercial banks quoted the shilling at 100.20/40 per dollar, compared with 100.35/55 last Thursday.

“More people have been selling dollars, and the supply is meeting whatever demand is left after the end-month period,” said a trader from a commercial bank.

UGANDA

The Uganda shilling is expected to be stable in the coming days on expectations the central bank is likely to intervene in the market if the local currency weakens substantially below 3,700.

At 1139 GMT commercial banks quoted the shilling at 3,710/3,720, slightly weaker than last Thursday’s close.

Faisal Bukenya, head of treasury at Exim Bank, said the central bank appeared comfortable with the shilling around 3,700 and that it was likely to sell dollars to support the local currency if it depreciated substantially below that.

“I think that expectation will keep some traders from taking positions and the shilling on an even keel,” he said.

ZAMBIA

The kwacha is likely to remain on the back foot due to scant supply of dollars and general greenback strength against a basket of currencies.

Commercial banks quoted the currency of Africa’s No.2 copper producer at 9.9300 per dollar, weaker than 9.7300 at which it closed a week ago.

“US dollar sellers are taking advantage of the rates, converting to maximise their kwacha returns although this supply remains insufficient to meet market demand,” the Zambian branch of South Africa’s First National Bank (FNB) said in a note.

GHANA

Ghana’s cedi could remain under pressure next week on a persisting high interbank and corporate dollar demand, pending the drawdown of a $191 million IMF credit support for the central bank, analysts said.

The local currency was trading at a three-month low of 4.52 to the greenback by mid-morning on Thursday, compared with 4.50 a week ago.

“Demand is expected to continue to outstrip greenback supply, and the pair is likely to see a new high at 4.5350 levels before easing as the IMF disbursement and fresh Eurobond inflows hit the market,” said currency analyst Joseph Biggles Amponsah.

Ghana began a roadshow this week for the issuance of up to $2.5 billion worth of Eurobonds for the government’s finances, including restructuring debt.

NIGERIA

The Nigerian naira could ease against the dollar next week for investors due to increased demand as companies seek to repatriate dividends after the end of the earnings season, coupled with portfolio investors taking profits, traders said.

Traders said the naira eased to 361 on Thursday for investors, from the 360 levels it has maintained for over six months, as some forward currency contracts matured amid tight dollar liquidity.

On the official market, the naira was quoted at 305.70, supported by the central bank’s regular intervention. One lender traded the currency at 314.50 naira on Thursday.

TANZANIA

The Tanzanian shilling is seen holding steady or strengthening marginally against the U.S. dollar in the days ahead, helped by expected inflows of hard currency from the agriculture sector.

Commercial banks quoted the shilling at 2,283/2,288 to the dollar on Thursday, weaker than 2,278/2,288 two weeks ago. There was no foreign exchange trading on Thursday last week due to a public holiday.

“There is some resistance on the 2,290 level, so we expect the shilling to remain range-bound or appreciate slightly next week due to the onset on the cotton export season,” said a trader at CRDB Bank. (Reporting by John Ndiso, Chris Mfula, Kwasi Kpodo; compiled by Omar Mohammed)

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