June 18, 2020 / 12:00 PM / 19 days ago

WEEKAHEAD-AFRICA FX - Uganda, Kenya shilling, Zambia Kwacha to be stable

LAGOS, June 18 (Reuters) - The Kenyan and Ugandan shillings are expected to hold steady against the dollar in the next week to Thursday, as will Zambia’s kwacha, traders said.


The Kenyan shilling is seen remaining steady due to tightening liquidity in the local money market and inflows from horticulture exports offsetting dollar demand from merchandise importers and manufacturers.

Commercial banks quoted the shilling at 106.35/55 per dollar, compared with 106.45/65 at last Thursday’s close.

“Liquidity in the market is starting to thin and we expect the shilling to gain in the process,” said a senior trader from one commercial bank.


The Ugandan shilling is expected to be little changed on the back of the central bank mopping up excess liquidity in money markets.

Commercial banks quoted the shilling at 3,720/3,730, compared with last Thursday’s close of 3,725/3,735.

On Thursday the Central Bank of Uganda absorbed excess liquidity from the money market.

“The unit (shilling) will swing in a stable range, possibly between 3,720-3,740,” said a trader at one of the commercial banks, adding that the liquidity mop-up would help lend support to the currency.


Tanzania’s shilling is likely to weaken slightly due to dollar demand from the manufacturing sector.

Commercial banks quoted the local currency at 2,309/19 on Thursday, the same levels recorded a week earlier.

“We are seeing a slight demand for dollars in the market mostly from manufacturing but not much inflow to match the demand. We expected tourism to add up some dollars in the market but we haven’t received as expected,” a trader at one commercial bank in Dar es Salaam said.


Nigeria’s naira is seen unchanged despite a build-up of dollar demand, as the central bank rations foreign exchange supplies to protect its dwindling reserve and support the currency.

The naira opened weaker at 385 against the dollar on Thursday for the second time in a row on the official market, backed by the central bank, but recovered to 361 after two trades.

Dollar demand has ballooned on the money 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 453 on Thursday.

Finance Minister Zainab Ahmed said this week the country will seek to unify its multiple exchange rate regime to generate more local currency from its dollar inflows and manage the rate in a sustainable manner.


The kwacha is likely to hold its own against the dollar next week with the market mainly driven by matching demand and supply.

On Thursday, commercial banks quoted the currency of Africa’s second largest copper producer at 18.2140 per dollar, the same level it traded at the close a week ago.

“We expect trading to continue around current levels, with typical market fluctuations, unless we see big orders on either side,” Zambia National Commercial Bank (ZANACO) said in a note. (Reporting by Elias Biryabarema, John Ndiso, Nuzulack Dausen, Chris Mfula and Chijioke Ohuocha; Compiled by George Obulutsa; Editing by Mark Heinrich)

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