NAIROBI Nov 24 (Reuters) – Kenya’s shilling is expected to come under pressure next week as month end dollar demand increases, while Zambia’s kwacha is seen stable on a steady supply of hard currency in the market.
The Kenyan shilling is likely to weaken due to increased dollar demand from importers, while market players will also be watching the central bank’s rate decision on Monday.
At 0823 GMT on Thursday, commercial banks quoted the shilling at 101.85/95 to the dollar, compared with 101.70/80 at last Thursday’s close.
“We expect end month dollar demand from importers and manufacturers to put more pressure on the shilling,” said a trader from a commercial bank.
The naira is expected to depreciate slightly at both the official and parallel markets on the back of gradual increase demand for forex by small businesses stocking for forthcoming Christmas and New Year sales.
The local currency was quoted at 470 to the dollar on the parallel market on Thursday, weaker than 465 a dollar last week due to increasing demand for dollars, traders said.
Commercial banks quoted the naira at 305 per dollar on the official window, near levels it has closed since August.
“The clamp down on black market operators by security agents has negatively impacted dollar supply to the market,” one Bureau de changer operator said.
Security agents have been raiding the offices of black market currency dealers, ordering some to sell dollars at a lower rate in a bid to break the fall of the local currency.
Ghana’s cedi could remain under pressure on unmet dollar demand by businesses settling their year end import bills until the central bank begins forex auctions mid next week.
The cedi, which had been fairly stable this year, has been on the ropes in the past three weeks, touching 4.1000 to the dollar by 1100 GMT on Thursday compared with 4.0400 a week ago.
Analyst Joseph Biggles Amponsah of the Accra-based Dortis Research forecast the cedi would touch a year-high of 4.15 early next week “amidst comparatively scanty dollar supply.”
The Uganda shilling is expected to face pressure against the dollar, hit by weak foreign exchange inflows as low rates on government securities deters offshore demand.
At 0924 GMT commercial banks quoted the shilling at 3,625/3,635, weaker than last Thursday’s close of 3,590/3,600.
“We are not seeing inflows from offshore investors, the appetite in the fixed income market has reduced,” said Joel Serubiri, trader at Housing Finance Bank, referring to government debt.
The Tanzanian shilling is expected to hold steady in the week ahead, amid subdued demand for U.S. dollars and supported by inflows of foreign exchange from the agriculture sector.
Commercial banks quoted the shilling at 2,179/2,184 to the dollar on Thursday, barely moved from 2,175/2,185 a week ago.
“The shilling is getting some support from cashew nut exports while demand for dollars has slowed down as we approach the end of the month. The outlook for next week is that of stability,” said Mohamed Laseko, a dealer at CRDB Bank.
The kwacha is expected to hold within the current levels due to matching demand and supply of hard currency in the market.
At 1016 GMT, commercial banks quoted the currency of Africa’s No. 2 copper producer at 9.8150 per dollar from a close of 9.9100 a week ago.
“The kwacha has been trading steady and we expect this to continue into next week. It is fair to say to a large extent demand has matched supply,” one senior commercial bank trader said. (Reporting by John Ndiso, Oludare Mayowa, Kwasi Kpodo, Elias Biryabarema, Fumbuka Ng’wanakilala and Chris Mfula; Compiled by Tanisha Heiberg; Editing by James Macharia)