Weekahead-Africa FX – Nigeria’s Naira And Kenya’s Shilling To Weaken

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Nigeria’s naira and the Kenyan shilling are expected to lose value against the dollar in the week ahead as demand pressures from importers build ahead of Christmas shopping season.

NAIROBI, Nov 19 (Reuters) – Nigeria’s naira and the Kenyan shilling are expected to lose value against the dollar in the week ahead as demand pressures from importers build ahead of Christmas shopping season.

NIGERIA
The naira NGN= is expected to weaken on the black market in the coming week as demand pressure resurfaces with importers stocking up goods ahead of Christmas sales in the wake of dollar shortages from official sources, traders said.

The naira fell to 478 per dollar on the black market on Thursday after it hit a 12-week low of 475 on the parallel market on Monday.

The currency was quoted on the official market at 381 per dollar, a level it has been at since July.

Traders had expected the naira to trade flat on the black market amid hopes higher oil prices would boost Nigeria’s dollar flows but demand is swelling faster than had been anticipated, traders said.

The naira traded at 385.93 on the over-the-counter spot market NAFEX=FMDQ, widely quoted by investors and importers, on thin volumes.

KENYA
Kenya’s shilling KES= is expected to weaken, undermined by increased importer dollar demand from oil companies and other general goods importers, coupled with low inflows from sectors like tourism and agriculture.

Commercial banks quoted the shilling at an all-time low of 109.30/50 to the dollar, compared with last Thursday’s close of 108.90/109.10.

“The dollar demand is coming from all sectors; definitely energy sector, mainly petroleum and also general merchants. So all this demand against lack of inflows. Exports have dwindled; we have no tourism inflows,” said a trader at one commercial bank.

TANZANIA
Tanzania’s shilling TZS= is also expected to come under pressure due to higher demand from importers outweighing inflows from tourism and agriculture exports.

Commercial banks quoted the Shilling at 2,314/24 on Thursday, unchanged from a week earlier.

“We foresee high import demand outweighing support from inflows from the tourism sector and agricultural products, driving the shilling weaker in the coming week,” Terry Karanja, a treasury associate at AZA, a Nairobi-based FX trading firm said.

UGANDA

The Ugandan shilling UGX= is seen weakening in the coming days on month-end demand from importers and negative sentiment from unrest triggered by the arrest of presidential candidate Bobi Wine.

At 1053 GMT commercial banks quoted the shilling at 3,702/3,712, compared to last Thursday’s close of 3,690/3,700.

A trader at one of the leading commercial banks said they expect a surge in demand from merchandise importers as traditionally happens toward end of the month.

“I think there’s a negative sentiment from the riots too, that might trigger some players going short on the shilling,” he said.

Riots erupted in Uganda’s capital Kampala and elsewhere on Wednesday and continued on Thursday after Police detained Wine who is seeking to unseat long-ruling President Yoweri Museveni.

ZAMBIA
The kwacha ZMW= is expected to remain under pressure against the U.S. dollar next week due to a reduction in the supply of foreign exchange.

On Thursday, commercial banks quoted the currency of Africa’s second largest copper producer at 20.9200 per dollar from a close of 20.8650 a week ago.

“Currently, subdued foreign exchange supply amidst increased demand has continued to underlie the market,” the Bank of Zambia said in a monetary policy statement on Wednesday.

– Reuters

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