Nigeria’s naira and other African currencies are likely to trade stable or firm slightly in the week ahead, helped by Diaspora inflows and waning appetite for hard currency as some firms wind down activity ahead of Christmas holidays.
NIGERIA
The naira NGN is seen flat across markets next week after money transfer operators started to pay out dollars to beneficiaries of Diaspora remittances following the central bank’s easing of restrictions.
The naira traded at 476 per dollar on Thursday on the black market, where it trades more freely, a level it was quoted at a week earlier.
The currency was quoted at 381 per dollar on the official market, a level set by the central bank in July. The naira sold at 391.78 on the over-the-counter spot market NAFEX FMDQ, quoted by investors and importers, in thin trade.
Last week, Nigerian banks started to pay out dollars for Diaspora inflows and closed naira remittance accounts after the regulator eased money transfer rules to try to boost forex liquidity in the country.
KENYA
The Kenyan shilling KES is seen firming moderately, due to low dollar demand as most companies start closing ahead of the festive season.
At 1150GMT on Thursday the shilling was quoted at 111.50/111.65, compared with 111.45/111.65 at the end of trading a week earlier.
“Next week, I think because many companies are closing down, there won’t be much activity in the market and so we may see the Kenyan shilling strengthen just a little bit,” said a trader at one commercial bank.
UGANDA
The Ugandan shilling UGX is seen trading in a stable range amid slowing appetite for hard currency from firms in major sectors like manufacturing and others.
At 1139GMT commercial banks quoted the shilling at 3,660/3,670, compared to last Thursday’s close of 3,670/3,680.
A trader at one of the leading commercial banks said appetite for hard currency was slowing down especially among manufacturing, telecoms, energy and other sectors as they prepare to break off for year-end holidays.
“Demand is fizzling out and considering that, I see the local unit holding steady,” he said, adding the shilling will likely oscillate in the 3,650-3,670 range.
TANZANIA
The Tanzanian shilling TZS is also expected to broadly hold steady next week as pressure to the local currency decreases due to slow business activities ahead of holiday season.
Commercial banks quoted the shilling at 2,314/24 on Thursday, the same level recorded a week earlier.
“We are expecting the shilling to stabilise and tourism will contribute slightly on inflows which will match the current demand of US dollars in the market,” a trader at one of the commercial banks in Dar es Salaam said.
ZAMBIA
The kwacha ZMW is expected to remain under pressure against the dollar next week as demand for hard currency continues to outweigh supply.
On Thursday, commercial banks quoted the currency of Africa’s second largest copper producer at 21.0700 per dollar from 21.0450 at the close of business a week ago.
“Dollar demand remains higher than supply and this should continue putting pressure on the local currency going into next week,” one commercial bank trader said.
– Reuters