Weekahead-Africa-FX-Dollar Dearth Weighs Down Kenyan, Nigerian Currencies

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The Kenyan shilling and the Nigerian naira are expected to weaken in the week ahead, mainly because coronavirus disruptions have led to a dearth of dollars.

NIGERIA

Nigeria’s naira is expected to ease on the black market after the central bank sent it lower on the futures market last week, as dollar shortages crippled the economy, traders said.

The naira fell to 472 per dollar on the unofficial market on Thursday, weaker than the 388.36 on the over-the-counter spot market, widely quoted by investors and importers.

Dollar shortages have plagued the country for months after sharp falls in oil price, Nigeria’s main export, shifting demand to the black market.

The central bank last week told lenders to stop processing new trade documents for maize imports to conserve reserves.

KENYA

The Kenyan shilling is seen weakening further after this week hitting a record low because of dollar demand from importers after the state eased lockdown measures, traders said.

Commercial banks quoted the shilling at 108.15/35 per dollar, compared with 107.25/45 at last Thursday’s close.

“We have opened up the economy but importers are finding it difficult because of the dollar supply crunch,” said a senior trader from one commercial bank, referring to the lack of tourists and their dollars.

UGANDA

The Ugandan shilling is seen trading in a stable range due to inflows from non-governmental organisations and an excess liquidity mop-up by the central bank.

At 0948 GMT, commercial banks quoted the shilling at 3,695/3,705, compared with last Thursday’s close of 3,690/3,700.

The shilling will likely trade in a narrow band around 3,700 in the comings days, said a trader at one of the commercial banks.

ZAMBIA

The Zambian kwacha is likely to hold within the same range against the dollar next week, supported by hard currency sales by firms to meet their month-end obligations.

On Thursday, commercial banks quoted the currency of Africa’s second largest copper producer at 18.1250 per dollar, from 18.2320 at close of trading a week ago.

“It should continue trading largely the same with support from dollar conversions as companies prepare to pay salaries and other month-end dues,” one commercial bank trader said.

TANZANIA

Tanzania’s Shilling is expected to hold steady next week due to a balanced supply and demand of dollars in the market.

Commercial banks quoted the Shilling at 2,314/2,324 on Thursday, compared with 2,312/2,320 a week earlier.

“We expect the Shilling to continue remaining stable next week due to the contribution of inflows from mining and commodities,” said a senior trader in a commercial bank.

– Reuters.

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