March 5, 2020 / 1:04 PM / a month ago

WEEKAHEAD-AFRICA-FX-Kenyan shilling seen pressured while Zambian Kwacha could firm

NAIROBI, March 5 (Reuters) - The Kenyan shilling is seen depreciating on the back of a central bank move to purchase hard currency to beef up reserves while Zambia’s Kwacha might claw back losses as debt payment pressures ebb.

KENYA

The Kenyan shilling is seen weaker in the coming week as banks shore up their hard currency positions after the central bank announced a dollar purchase plan, traders said.

At 1101 GMT, commercial banks quoted the shilling at 102.50/70 per dollar, compared with 100.90/101.10 at last Thursday’s close.

“We’re seeing a lot of panic buying ... let’s see how they (CBK) contain it, the buck now stops with them,” said a senior trader from one commercial bank.

This week the central bank announced it would start purchasing $100 million every month between March and June to help beef up its foreign reserves. The announcement triggered the local currency to depreciate to a three-month low.

UGANDA

The Ugandan shilling is seen trading with a weakening bias on the back of foreign-owned firms buying hard currency to meet last year’s dividend payout obligations.

At 0920 GMT commercial banks quoted the shilling at 3,705/3,715, compared with last Thursday’s close of 3,710/3,720.

“We’re in the dividends season. There’s a bit of pressure weighing on the shilling and that will continue for the next few weeks,” Faisal Bukenya, managing director at Pay Uganda, an independent foreign exchange dealer in Uganda’s capital Kampala told Reuters.

He said the local currency would likely oscillate in the range of 3,700-3,725 in the coming week.

TANZANIA

The Tanzanian shilling is expected to hold steady next week due to receding demand pressure for hard currency from merchandise importers as the disruption of travel by the coronavirus epidemic hobbles international trade.

Commercial banks quoted the shilling at 2,299/2,309 on Thursday, up from an average of 2,305/2,315 recorded last week.

“Import activities ... have gone down due to the coronavirus, which has reduced pressure to the shilling,” a trader in one of the commercial banks in Dar es Salaam told Reuters.

ZAMBIA

The Zambian kwacha is expected to recover some of its losses in the coming week as pressure arising from servicing debt temporarily eases.

On Thursday commercial banks quoted the currency of Africa’s second-largest copper producer at 15.1750 per dollar, down from a close of 14.9500 a week ago.

“It could get back below 15 per dollar ... because the due payment was made,” independent financial analyst Maambo Hamaundu said.

NIGERIA

Nigeria’s naira is seen easing next week amid expectations the worldwide coronavirus outbreak will worsen dollar liquidity shortages in the West African country, traders said.

A few trades were carried out on the naira at 366.5 on the over-the-counter market on Wednesday, weaker than the 365 level at which the currency has been quoted for over a week.

Traders said liquidity is tight and that it is becoming harder to meet demand. The central bank has been helping to keep the naira stable at 307 on the official market but demand is rising.

Foreign inflows into the Africa’s biggest economy dried up after government bond yields slowed while a drop in oil prices triggered by the coronavirus outbreak has exacerbated hard currency supply worries. (Reporting by Elias Biryabarema; Nuzulack Dausen; John Ndiso; Chijioke Ohuocha; Chris Mfula. Compiled by Elias Biryabarema; Editing by Steve Orlofsky)

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