August 29, 2019 / 12:09 PM / 5 months ago

WEEKAHEAD-AFRICA FX- Uganda's shilling weaker, Kenya's under pressure

KAMPALA, Aug 29 (Reuters) - The Ugandan shilling is expected to weaken next week and Kenya’s to come pressure amid month-end dollar demand.


The Ugandan shilling is expected to weaken on demand from retailers who need to pay for goods.

At 0949 GMT, commercial banks quoted the shilling at 3,683/3,693, compared with last Thursday’s close of 3,683/3,693.

“Typically from around September we tend to see elevated demand (for dollars) from importers of goods like textiles, electronics, leather products and others,” said an independent foreign exchange trader in Kampala.

He said the shilling would trade between 3,685 and 3,710, probably towards the weaker side.


Tanzania’s shilling is expected to gain as inflows increase from tourism and agriculture.

Commercial banks quoted the shilling at 2,292/2,302 on Thursday, up from 2,293 to 2,303 recorded last week, a trader in at Dar es Salaam told Reuters.

“The shilling has been stable for the last two weeks and it keeps appreciating,” he said. “We expect more stability and further appreciation next week due to increase in inflows from the tourism sector as we are in the tourism season and from agriculture exports.”

He also expects demand side to be driven by energy and manufacturing.


The Kenyan shilling will be under pressure in the coming week amid demand for dollars from energy and manufacturing companies, traders said.

At 1048 GMT, commercial banks quoted the shilling at 103.45/65 per dollar, compared with 103.10/30 at last Thursday’s close.

“The driving factor would be liquidity and end of month demand ... we’ve seen the regulator intervening aggressively on the money market side,” said a senior trader from one commercial bank.


The Nigerian naira is expected to gain next week following the end of loan repayments and dividend repatriation season and improvement in dollar liquidity as the central bank auctions debt.

Traders said the currency was quoted at 362.85 on Thursday, up from last week’s 364, as investors curtailed their exit from local debt and demand for the currency waned.

Central Bank Governor Godwin Emefiele met with investors in London last week to discuss the currency after the naira weakened and as yields on local debt declined.

“Liquidity has improved,” one trader said, adding that investors are seeking yields despite global risk aversion. “If the central bank becomes consistent with OMO offering, we expect to see an improvement.”

The central bank plans to auction 400 billion naira in open market bills on Thursday, to roll over existing debt, traders said.


The kwacha is expected to continue trading within the current range against the U.S. dollar, supported by improved liquidity in the market.

On Thursday, commercial banks quoted the currency of Africa’s second-largest copper producer at 13.0300 per dollar from a close of 13.0700 a week ago.

“We expect the local unit to remain range-bound with a bias towards appreciating. Trades below 13.00 are not far off,” the local branch of South Africa’s First National Bank said in a note. (Reporting by Elias Biryabarema, Chijioke Ohuocha, Nuzulack Dausen, Chris Mfula and John Ndiso; compiled by Omar Mohammed; editing by Larry King)

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