WEEKAHEAD-AFRICA-FX-Nigerian currency seen under pressure, Kenyan rally to pause

PUBLISHED: Thu, 15 Apr 2021 12:45:40 GMT
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NAIROBI, April 15 (Reuters) – The Nigerian naira is likely to ease in the next week after the central bank offered future contracts at weaker rates, while the Kenyan shilling’s recent rally could slow down.

NIGERIA

The naira could ease on the spot market after the central bank, in its first hard currency sale to foreign investors this year, quoted it at a low of 435.81 for the five-month forward contract, traders said.

The unit slid to a record intra-day low of 436.81 against the dollar, following the central bank sale earlier in the week.

The currency was quoted at 482 per dollar on the parallel market on Thursday, a level it has been stuck at since this week. It remains flat on the official market , which is backed by the central bank, at 381 naira, where it has been stuck since last July.

KENYA

The Kenyan shilling is seen slowing its recent rally in the coming days as a wave of dollar sell-offs, which has pushed the local currency to a nine-month high, gives way for rebuilding of positions.

On Thursday, commercial banks quoted the currency of East Africa’s biggest economy at 106.70/90 per dollar, compared with 107.85/108.05 a week earlier.

“It has rallied quickly. I see a point where buyers are going to come back, because they have oversold their (U.S. dollar) positions,” said a trader at one commercial bank in the capital Nairobi.

ZAMBIA

The kwacha is expected to remain broadly weak against the dollar in the coming week as demand for hard currency continues to outweigh supply.

On Thursday, commercial banks quoted the currency of Africa’s second-largest copper producer at 22.1800 per dollar, from 22.1200 at the close of business last Thursday.

“It will continue weakening but the decline is unlikely to be very sharp because of support from VAT (Value Added Tax) payments due next week,” one commercial bank trader said, referring to the sale of hard currency to meet local tax demands.

UGANDA

The Ugandan shilling is likely to maintain its recent firming tone on the back of positive sentiment following signing of agreements that have accelerated plans to kick-start mega investments in the country’s crude oil industry.

At 0833 GMT, commercial banks quoted the shilling at 3,615/3,625 per dollar, compared with last Thursday’s close of 3,645/3,655.

On Sunday, Uganda and Tanzania signed agreements with international oil firms that are expected to trigger vast inflows of hard currency to fund development of a crude pipeline and oil fields in Uganda’s west.

“The shilling will continue to draw oxygen from anticipation of those inflows,” said a trader at one commercial bank.

TANZANIA

Tanzania’s shilling is expected to gain next week as inflows from foreign investors helps to absorb demand of the dollar from manufacturing and energy importers.

Commercial banks quoted the shilling at 2,314/2,324 on Thursday, unchanged from last week’s close.

The projected offshore investor inflows are related to the construction of a pipeline to move crude oil from neighbouring Uganda, which will be transported through a Tanzanian port, said Terry Karanja, a treasury associate from AZA, a Nairobi-based FX firm. (Reporting by Elias Biryabarema, Chijioke Ohuocha and Chris Mfula; Editing by Duncan Miriri and Steve Orlofsky)

(c) Copyright Thomson Reuters 2021. Click For Restrictions – https://agency.reuters.com/en/copyright.html

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