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WEEKAHEAD-AFRICA-FX-Nigerian, Ugandan currencies seen firming, Kenya, Zambia's weaker

reuters.com · 11/11/2021 07:14
WEEKAHEAD-AFRICA-FX-Nigerian, Ugandan currencies seen firming, Kenya, Zambia's weaker

- Nigerian and Ugandan currencies may firm versus the U.S. dollar next week as Kenya's and Zambia's weaken, while Tanzania's currency is likely to hold steady.


The Nigerian naira is expected to firm on the black market next week on the back of higher oil prices and inflows from dollar-denominated debt amid slowing demand for hard currency on the unofficial market, traders said.

The currency edged up to 550 naira per dollar on Thursday on the parallel market NGNP=, from 565 naira a week earlier. On the official market, commercial banks quoted the currency in a range of 409-415 against the dollar.

Nigeria raised a $4 billion Eurobond at the end of the third quarter, giving the country headroom to defend the currency. Also Brent crude LCOC1, the benchmark against which Nigeria's oil is indexed, rose above $83 a barrel on Thursday.nL1N2QN2WPnL1N2S208L


The Ugandan shilling UGX= is seen trading with a firming tone in the comings days, helped by a surge in inflows of hard currency from remittances.

At 1012 GMT, commercial banks quoted the shilling at 3,520/3,530, compared to last Thursday's close of 3,550/3,560.

"The market is receiving significant inflows from remittances. I anticipate that trend will go on well into December," said a trader at one of the commercial banks.

He said the shilling would likely firm to the key psychological level of 3,500 over the next week.


The Kenyan shilling KES is expected to stay on the back foot as dollar demand, especially from the energy sector, continues to outstrip supply.

Commercial banks quoted the shilling at 111.80/112.00 at 0952 GMT, unchanged from the previous session when the currency hit an all-time low.

Last Thursday, the shilling closed at 111.45/65.

"We might see a little bit of support from VAT tax payments, which should happen next week," said one trader, adding that overall however the shilling would remain under broad pressure.


The kwacha ZMW= is likely to remain under mild pressure against the dollar next week as demand for hard currency continues to surpass supply, even with occasional central bank support.

On Thursday, commercial banks quoted the currency of Africa's second largest copper producer at 17.4400 per dollar, marginally down from 17.3400 at the close of business a week ago.

"We are coming from a background where the kwacha gained largely as a result of positive sentiment, but the economic fundamentals remain the same," one commercial bank trader said.


Tanzania's shilling TZS= is expected to hold steady next week due to an increase in demand for agricultural and mining exports.

Commercial banks quoted the shilling at 2,297/2,307, the same levels recorded a week earlier.

"Given strong export demand, we expect to see a stable shilling in the coming week," Terry Karanja, a treasury associate at AZA, a Nairobi-based FX firm, said.

(Reporting by Chijioke Ohuocha, Ayenat Mersie, Chris Mfula, Elias Biryabarema and Nuzulack Dausen; Compiled by Chris Mfula; Editing by Jan Harvey)