Kenya, Uganda, Nigeria currencies to ease against dollar
NAIROBI, Aug 18 (Reuters) - The Kenyan and Ugandan shillings, as well as the Nigerian naira, are likely to lose ground to the dollar in the next week, while the Tanzanian and Zambian currencies were seen stable, traders said.
Kenya's shilling KES= will face pressure as dollar demand rises in the wake of the Aug. 9 general election, while supply remains low as offshore investors remain wary of the local market owing to a lack of liquidity.
Commercial banks quoted the shilling at 119.60/80 per dollar, compared with last Thursday's close of 119.15/35. The shilling's present level is a new all-time low, according to Refinitiv data.
"Supply is still quite thin. The lack of liquidity in the forex market is keeping offshore investors away, despite attractive interest rates and prices on the stock market," one trader said. "If you come in, how are you going to get out?"
The kwacha ZMW= is likely to hold steady due to increased dollar supply from companies converting to the local unit to pay taxes.
On Thursday, commercial banks quoted the currency of Africa's second-largest copper producer at 16.2600 per dollar from 16.1800 at the close of business a week ago.
"The kwacha is expected to exhibit stability in the near term as corporates continue to offload dollars to meet their tax obligations," Access Bank ACCESS.LG said in a note.
The Ugandan shilling UGX= is expected to weaken on the back of elevated appetite for dollars from merchandise importers.
Commercial banks quoted the shilling at 3,820/3,830, compared to last Thursday's close of 3,765/3,775.
"Some importers are betting that the dollar will likely be costlier in the coming days so they are exerting demand now ... we are seeing considerable pressure on the local unit," said a trader at one commercial bank in the capital Kampala.
He said uncertainty following the presidential election in Kenya, Uganda's largest trading partner, was also generating negative sentiment for the local currency.
Raila Odinga, who lost the poll to rival William Ruto, has rejected the results, and plans a court challenge.
Nigeria's naira NGNP= is seen easing on the parallel market, as dollar demand rises on the back of surging inflation in Africa's biggest economy, traders said.
The currency was quoted at 682 naira per dollar on Thursday on the unofficial market.
"We expect elevated dollar demand to continue pushing the naira towards the 700 level in the near term," foreign exchange trading firm AZA Finance said in a note.
The unit traded in a range of 419 to 430 naira to the dollar on the official market NGN= , compared with a range of 413 to 417 naira in May, when the central bank moved it to that level. The bank moves its range periodically to adjust to demand for the hard currency.
Tanzania’s shilling is expected to hold steady, helped by government measures aimed at curbing inflation.
Commercial banks quoted the shilling at 2,327/2,337 on Thursday, the same level as last Thursday's close.
"The government has been attempting to keep the economy stable through a combination of fuel subsidies, tax exemptions and maintaining foreign exchange reserves," Kristine Van Helsdingen, a Forex Dealer at AZA Finance, a Nairobi-based foreign exchange trading firm, said.
"With that in mind, we expect the shilling to stabilise against the dollar in the week ahead."
Reporting by Elias Biryabarema, Nuzulack Dausen, Chris Mfula, Chijioke Ohuocha and Hereward Holland Compiled by George Obulutsa Editing by James Macharia Chege
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