October 24, 2019 / 2:45 PM / 25 days ago

WEEKAHEAD-AFRICA-FX-Kenyan shilling to strengthen, Nigeria naira to be stable

DAR ES SALAAM, Oct 24 (Reuters) - Kenya’s shilling is forecast to gain ground against the dollar in the next week to Thursday, while Uganda’s currency will weaken and Nigeria’s naira will be stable, traders said.

KENYA

The Kenyan shilling is expected to strengthen due to inflows from offshore investors buying government bonds and tightening liquidity in the local money market that will counter dollar demand from the energy sector.

Commercial banks quoted the shilling at 103.15/35, compared with 103.65/85 at last Thursday’s close.

“We’re watching investor interest in the infrastructure bond ... we’re not seeing much in terms of end-month demand,” said a senior trader from one commercial bank.

UGANDA

The Ugandan shilling is forecast to weaken, undermined by a rebound in demand for dollars from the energy, manufacturing and construction sectors.

Commercial banks quoted the shilling at 3,710/3,720, compared to last Thursday’s close of 3,685/3,695.

“Customer appetite has rebounded from across board and that will likely exert significant pressure on the local unit,” said a trader from a leading commercial bank.

TANZANIA

Tanzanian shilling is expected to hold steady, helped by dollar demand from the telecoms, energy and manufacturing sector being matched by supply from companies selling dollars to meet end-month obligations like salaries.

Commercial banks quoted the shilling at 2,298/2,308 against a dollar from a close of 2,295/2,305 a week earlier.

“We expect next week the currency (shilling) to hold steady because of the support from end-month inflows. Companies and other organisations will be buying shilling to meet their end of the month obligations,” a trader at one commercial bank in Dar es Salaam said.

NIGERIA

Nigeria’s naira is expected to be stable due to the central bank’s attempt to attract more foreign inflows after it barred local investors from participating at its open market Treasury auctions, traders said.

The naira touched a low of 362.24 on Thursday on the over-the-counter market where it trades. It has been quoted at a range of 361.50-362 this week, one trader said.

The currency was quoted at 307 on the official market, supported by the central bank. Nigeria operates a multiple currency regime.

The central bank on Wednesday restricted local investors from participating in its Treasury bill auction in a bid to draw more foreign interest to boost dollar liquidity and prop up the naira. Domestic investors can buy bills on the secondary market. (Reporting by Nuzulack Dausen, Elias Biryabarema, Chijioke Ohuocha and John Ndiso; Compiled by George Obulutsa; Editing by Sriraj Kalluvila)

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