March 12, 2020 / 2:49 PM / a month ago

WEEKAHEAD-AFRICA-FX-Uganda, Nigeria currencies seen soft, Tanzania's firm

KAMPALA, March 12 (Reuters) - Ugandan and Nigerian currencies are expected to come under pressure next week, but Tanzania’s is seen firming while Kenya’s holds steady.

UGANDA

The Ugandan shilling is expected to trade with a weakening tone over the next few days as the disruption to international trade links and tourism caused by the coronavirus pandemic trims inflows of hard currency.

At 1110 GMT, commercial banks quoted the shilling at 3,710/3,720, compared with last Thursday’s close of 3,700/3,710.

“The tourism sector is being hurt badly and the commodity export sector ... the dollar supply side is getting squeezed,” said a trader from a leading commercial bank.

He said the shilling would likely weaken past 3,720 in the coming days as the global economic impact of the coronavirus snowballs.

NIGERIA

Nigeria’s naira is seen easing next week amid fears of a possible devaluation in the wake an oil price collapse that has worsened dollar shortages in the West African nation, traders said.

The naira was quoted at 370 on the over-the-counter market on Thursday, weaker than the 368 per dollar in the previous session.

Traders said liquidity was tight amid a surge in demand. The naira has also been weakening on the black market. However, the central bank has been helping to keep the naira stable at 306.95 on the official market.

The impact of the oil price plunge over the weekend has spread across asset classes in Nigeria, causing investors to widen spreads on the bond market, sell stocks and weaken the naira.

TANZANIA

The Tanzanian shilling is expected to gain further next week due to the decline in demand for dollars.

Commercial banks quoted the shilling at 2,296/2,306 on Thursday, up from 2,299/2,309 recorded a week earlier.

“The demand of dollars has declined because of slowed importation due to coronavirus. We expect the shilling to gain further next week as there will be no pressure to the local currency,” a trader in one of the commercial banks said.

KENYA

The Kenyan shilling is seen stable in the coming week, with inflows from non-governmental organisations helping ease dollar demand from commercial banks and importers, traders said.

Commercial banks quoted the shilling at 102.40/60 per dollar, compared with 102.50/70 at last Thursday’s close.

“There are a number of NGOs in the market looking to buy shillings,” said a senior trader from one commercial bank. (Reporting by Elias Biryabarema,Chijioke Ohoucha, Nuzulack Dausen and John Ndiso; Compiled by Chris Mfula; Editing by Alex Richardson)

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