NAIROBI, Jan 17 (Reuters) - The Kenyan shilling and Tanzanian currencies could weaken in the next week to Thursday pressured lower by oil importers buying dollars next week, while the Ugandan, Zambian and Nigeria units could firm on offshore dollar inflows.
A surge of demand for dollars by oil importers could weigh on the Kenyan shilling which is already 0.8 percent weaker in the year-to-date at 86.70/90 to the dollar at 0933 GMT, weaker than last Thursday’s close of 86.60/80.
“There is some energy dollar demand. Political risk is also being factored in the market,” said John Muli, a trader at African Banking Corporation, referring to concern over violence that could erupt from ongoing primaries by political parties.
The parties are nominating candidates for parliamentary, civic and regional polls due to be held alongside a presidential vote on March 4.
The elections will be the first to be held in east Africa’s biggest economy since 2007 when President Mwai Kibaki won a second term in office amid opposition accusations the vote was stolen, prompting deadly nationwide violence.
The Tanzanian shilling is likely to depreciate next week due to a resurgence of demand for dollars from the oil sector amid declining inflows, traders said.
Commercial banks in east Africa’s second-biggest economy quoted the shilling at 1,600/1,610 to the dollar on Thursday, slightly weaker than 1,598/1,608 last Thursday.
“Going forward we think the shilling will depreciate a bit next week ... mainly due to demand for the U.S. currency in the market, especially from the oil sector,” said Hamisi Mwakibete, head of trading at Commercial Bank of Africa Tanzania.
The local currency is mainly supported by the central bank, which has regularly sold hard currencies to prevent the shilling from sliding steeply against the dollar.
Traders said they expect the shilling to trade in the 1,610-1,620 range in the days ahead.
“Without the central bank’s intervention, the shilling would be trading at 1,620 levels at the moment because the local currency usually depreciates sharply at the start of the year,” said a dealer at one commercial bank.
The Ugandan shilling is forecast to firm slightly underpinned by tight liquidity and expectations of dollar inflows from offshore investors buying Treasury debt.
At 1021 GMT, commercial banks quoted the currency of east Africa’s third-largest economy at 2,660/2,670, stronger than last Thursday’s close of 2,695/2,705.
The shilling, which is about 1 percent stronger the year-to-date, has been helped by commercial banks selling dollars and inflows from aid agencies. The currency had plummeted to a 14-month low of 2,715/2,725 on Jan 7.
“If a significant amount of inflows come through from offshore investors interested in the auction then I see the shilling remaining supported at current levels,” said Shahzad Kamaluddin, trader at Crane Bank.
The Bank of Uganda is scheduled to sell 100 billion shillings ($37.52 million) worth of Treasury bills of all maturities next Wednesday.
The Zambian kwacha is expected to firm due to increased dollar inflows and positive global economic growth data supportive of emerging market currencies.
The currency of Africa’s leading copper producer was at 5.260 per dollar in early afternoon trading on Thursday, almost the same as last week when it traded at 5.250.
“We have experienced good dollar supply in the last two days and that has helped the kwacha,” a commercial bank trader said.
“Going into next week the numbers on global economic growth are very encouraging for all emerging market currencies including the kwacha.”
Zambia introduced a rebased currency by dropping off three zeros from Jan. 1 2013, and will cease using the old notes in ordinary transactions by June this year.
Nigeria’s naira is seen strengthening against the U.S dollar next week on expected dollar flows from offshore investors buying local debt, and energy companies selling hard currency to obtain the naira for their domestic use.
The local currency was trading at 157.20 to the dollar at 1020 GMT, firmer than the 157.25 it closed at the previous day.
The naira surged to a five-and-a-half month high of 156.08 against the U.S dollar on the interbank market last week, a rate better than the effective central bank rate, triggering increased dollar demand by importers.
Traders said the naira should trade below the 157 mark to the dollar next week when more dollars could flow in from offshore investors buying treasury bills and bonds at an auction next Wednesday.
“We expect to see more dollar flows from offshore investors and energy companies next week, so the naira should strengthen to around 156.80-157 middle of next week,” one dealer said.
$1 = 2665.0000 Ugandan shillings Reporting by Kevin Mwanza, Fumbuka Ng'wanakilala, Elias Biryabarema, Chris Mfula and Oludare Mayowa; Editing by James Macharia, Ron Askew