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WEEKAHEAD-AFRICA-FX-Zambia, Uganda currencies under pressure

PUBLISHED: Thu, 25 Mar 2021 12:51:36 GMT

LUSAKA, March 25 (Reuters) – Zambia and Uganda’s currencies are expected to weaken under the pressure of the U.S. dollar next week as Nigeria and Tanzania’s hold steady.

ZAMBIA

The kwacha will likely continue trading under pressure from the dollar next week due to continued high demand for hard currency and a diminished supply.

On Thursday, commercial banks quoted the currency of Africa second largest copper producer down at 22.0100 per dollar from 21.9800 at the close of business last Thursday.

“It still remains anchored on our high level of indebtedness and the need for imports, such as fuel and agriculture inputs,” independent financial analyst Maambo Hamaundu said.

Zambia’s debt includes around $3 billion in outstanding Eurobonds and another $3 billion owed to China and Chinese entities. Tensions between those two groups of creditors have so far stymied attempts to restructure Zambia’s debt.

UGANDA

The Ugandan shilling is seen mildly weakening next week because of demand pressure from merchandise importers.

At 0944GMT commercial banks quoted the shilling at 3,660/3,670, unchanged from last Thursday’s close.

“As usual, some merchandise importers are anticipated to be active on the buying side,” a trader at one commercial bank said in reference to end of month demand.

He said the local currency will likely oscillate between 3,660-3,685 against the dollar.

NIGERIA

The naira is seen unchanged next week after the central bank governor this week denied it was changing its currency regime to a flexible exchange rate rather than a pegged one.

The currency eased slightly to 486 per dollar on the black market on Thursday, from 485 naira a week ago.

It traded within a range of 407 to 410 naira on the spot market but remained flat on the official market backed by the central bank at 381 naira since last July.

Dollar shortages have plagued Nigeria as COVID-19 weakened oil prices. The central bank has maintained a currency regime that has created multiple quotes on the naira and deterred foreign investment.

TANZANIA

Tanzania’s shilling is expected to hold steady next week as traders delay taking positions while monitoring for possible policy changes from the new president Samia Suluhu Hassan.

On Thursday, commercial banks quoted the shilling at 2,314/2,324, the same levels recorded a week earlier.

“We are waiting to see if the new president will employ any policy changes that will strengthen the currency,” an FX trader in one of the commercial banks in Dar es Salaam said.

Hassan took over as president last Friday after the death of John Magufuli, urging the east African country to look forward with hope and confidence. (Reporting by Chris Mfula, Elias Biryabarema, Chijioke Ohuocha and Nuzulack Dausen; Compiled by Chris Mfula; Editing by Barbara Lewis)

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