July 20, 2017 / 1:00 PM / 2 months ago

WEEKAHEAD-Kenyan shilling poised to weaken on higher import demand

NAIROBI, July 20 (Reuters) - Kenya’s shilling is expected to weaken next week, with increased import demand outweighing currency inflows, while the Zambian kwacha is likely to remain stable as companies convert to hard currency to meet month-end obligations.

KENYA

The Kenyan shilling could weaken, barring any central bank dollar sales, due to broad demand from food, retail and oil importers outweighing hard currency inflows, traders said.

Commercial banks quoted the shilling at 103.75/95 per dollar compared with 103.80/104.00 at last Thursday’s close.

“We are not seeing enough dollars coming into the market from foreign investors because we are approaching elections,” a trader at a commercial bank said.

ZAMBIA

The kwacha is expected to hold firm against the dollar, supported by hard currency sales by companies preparing to pay salaries and other month-end dues.

At 1219 GMT on Thursday, commercial banks quoted the currency of Africa’s second-largest copper producer at 8.7850 per dollar, from a close of 8.8500 a week ago.

“The Kwacha should trade steady against the dollar within a range of K8.800 to K8.900 on the interbank market with a bias to gain as corporates covert their dollars to meet their month end obligations,” Zambia National Commercial Bank said in a note.

GHANA

Ghana’s cedi is expected to regroup on potential bond portfolio inflows after losing ground to the dollar on news that the government would not extend its three-year IMF aid deal.

The cedi has been stable until Tuesday when President Nana Akufo-Addo said Ghana will not extend the $918 million deal as requested by the IMF. It was trading at 4.4200 to the greenback by midday on Thursday, compared to 4.4050 a week ago.

“The cedi is expected to take back the losses resulting from a ‘knee-jerk’ reaction to the news on the IMF ... propelled by expected inflows towards upcoming bond sales as confidence in the country’s macroeconomic environment continue to improve,” analyst Joseph Biggles Amponsah of Accra-based Dortis Research, said.

Investor response to an expected central bank rate cut on Monday could also shore up the local currency in the week ahead, Amponsah added.

NIGERIA

Nigeria’s naira is seen steady on the foreign exchange market in the coming days amid increased dollar supply from offshore investors and regular central bank interventions.

Traders said the forex market is sufficiently liquid to support the local currency in spite of a surge in demand for dollars by people travelling on summer holidays.

The naira was quoted at 367 to the dollar on the black market on Thursday, the same level as last week. It has stuck around 305.90 to the dollar on the official window since August.

The naira has significantly firmed on the investor forex window, it was quoted at 365.13 by FMDQ the market regulator, better than 367 to the dollar last week.

UGANDA

The Ugandan shilling is seen trading stable around the 3,600 level in the next few days, helped by hard currency inflows from coffee exporters and charities.

Commercial banks quoted the shilling at 3,595/3,605, compared to last Thursday’s close of 3,600/3,610.

“Coffee is doing very well in terms of inflows,” said a trader at a leading commercial bank, adding charities will also likely be converting some dollars to pay expenses like salaries.

TANZANIA

The Tanzanian shilling is expected to remain stable in the days ahead, but could weaken if demand for the U.S. currency from construction and energy sectors gains momentum.

Commercial banks quoted the shilling at 2,235/2,245 to the dollar on Thursday, weaker than 2,233/2,243 a week ago.

“The shilling has been under pressure from demand for dollars from construction and energy companies, but it will likely remain in same levels next week due to month-end inflows,” a trader at CRDB Bank said. (Reporting by Elias Biryabarema, Chris Mfula, Kwasi Kpodo, Oludare Mayowa, John Ndiso, Fumbuka Ng‘wanakilala,; Compiled by Tanisha Heiberg; editing by Alexander Smith)

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