NAIROBI Dec 1 (Reuters) – Nigeria’s naira is seen weakening further next week amid a crackdown on black market currency traders, while the Kenyan shilling may strengthen.
The naira is seen weakening further against the greenback next week in the parallel market as dollar scarcity persists in Africa’s top economy, while forex demand by small businesses is set to surge ahead of holiday season sales.
The local currency fell 2.08 percent week-on-week on Thursday to 480 to the dollar on the parallel market against 470 a dollar last week, while it was quoted by commercial lenders at 314.80 a dollar on the interbank market. The naira has, however, consistently closed around 305.5 a dollar level since August via the official window.
“The consistent clampdown on black market operators by security agents has driven some currency retailers underground, putting more pressure on available hard currency,” one dealer said.
The Kenyan shilling could strengthen against the dollar in the coming week due subdued to importer demand and increased inflows from overseas remittances, traders said.
At 0742 GMT, commercial banks quoted the shilling at 101.80/102.00 to the dollar, the same as last Thursday’s close.
“From the data we’ve seen in the past, we normally tend to see an uptick in diaspora inflows during this month of December,” said a trader at a commercial bank.
Ghana’s cedi is expected to regroup in coming weeks on improved forex inflows as the central bank launches a $40 million fortnightly interbank auction, traders say.
The cedi has been fairly stable this year but began sliding last month on a seasonal surge in end-of-year import demand and election-year shocks. It was trading at 4.3000 to the dollar at 1020 GMT on Thursday, compared with 4.1000 a week ago.
“We see the local unit potentially taking back some gains should the regulator keep the amount offered at $40 million in the upcoming fortnightly auctions,” Barclays Bank Ghana analyst Andrews Akoto said.
The Ugandan shilling is seen trading broadly stable in the coming days, helped by hard currency inflows from Ugandan workers abroad returning for Christmas holidays and a large central bank local currency liquidity mop-up.
At 0840 GMT, commercial banks quoted the shilling at 3,620/3,630, little-changed from last Thursday’s close of 3,625/3,635.
“There are small-sized inflows from those individuals but all combined they will offer substantial support,” said Joel Serubiri, trader at Housing Finance Bank. The Bank of Uganda on Thursday also removed a total of 669 billion shillings ($185 million) via a 7-day repo and a 28-day deposit auction.
The Tanzanian shilling is seen trading in a tight range against the dollar in the days ahead, helped by a slowdown in demand for greenbacks ahead of the holiday season.
Commercial banks quoted the shilling at 2,180/2,183 to the dollar on Thursday, barely moved from 2,179/2,184 a week ago.
“The isn’t much activity in the market as we approach the year-end festive period,” said Mohamed Laseko, a dealer at CRDB Bank.
The kwacha is expected to remain rangebound next week due to limited activity in the market ahead of the Christmas holidays.
At 1156 GMT on Thursday commercial banks quoted the currency of Africa’s second-largest copper producer at 9.8500 per dollar from 9.8300 a week ago.
“We expect activity to slow down in December and the first half of January. The thin market will sometimes cause the currency to swing,” the Zambian branch of South Africa’s First National Bank (FNB) said in a note. (Reporting by Oludare Mayowa, Kwasi Kpodo, Elias Biryabarema, Fumbuka Ng’wanakilala and Chris Mfula, John Ndiso; compiled by Katharine Houreld; Editing by Hugh Lawson)
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