LUSAKA, Aug 8 (Reuters) - Zambia’s currency is likely to come under pressure next week as those of Nigeria, Kenya and Uganda hold steady.
The kwacha is expected to remain under pressure in the coming week due to limited supply of hard currency.
On Thursday, commercial banks quoted the currency of Africa’s second-largest copper producer at 13.0000 per dollar from a close of 12.8700 a week ago.
“Unless dollar supply is injected into the market, our trajectory is that the kwacha will continue to weaken,” the local branch of South Africa’s First National Bank (FNB) said in a note.
Nigeria’s naira is seen stable next week after the currency hit a new resistance level amidst scarce dollar liquidity as importers are unwilling to bid at weaker levels, traders said.
The naira was quoted at 363.50 per dollar on Thursday, a level it has traded at since this week on thin volumes. The currency was quoted at 360 on exchange bureaus and at 306.90 on the official market, backed by the central bank.
Nigeria operates a multiple currency regime.
Foreign inflows have dried up in the wake of declining bond yields and the central bank’s new focus to boost lending to help an economy stuck in low gear. The bank launched an unscheduled open market (OMO) auction on Wednesday to target investors.
“For about three weeks, there’s been no liquidity. But it got really bad in the last one week,” one trader said. “If the OMO becomes more frequent maybe we may see foreign investors.”
The Kenyan shilling is seen steady against the dollar in the coming week with inflows from offshore investors buying government debt helping ease excess liquidity in the local money market, traders said.
Commercial banks quoted the shilling at 103.20/40 per dollar, the same as last Thursday’s close.
“Mid-term papers are really attractive especially for foreign funds, I can see inflows coming into that issue that might support the shilling ... we’re seeing a lot of liquidity on the money market side,” said a senior trader from one commercial bank.
The Ugandan shilling is seen trading in a stable range in coming days as some firms reserve a part of their local cash holdings for pending tax payments.
At 0918 GMT commercial banks quoted the shilling at 3,690/3,700, the same as last Thursday’s close.
“Appetite for dollars has been broadly flat and considering most firms will be preparing for mid-month payments, I don’t see that changing,” said Faisal Bukenya, an independent foreign exchange trader.
He said the shilling was likely to exchange hands at between 3,685-3,700 over the next week. (Reporting by Chris Mfula, Chijioke Ohuocha, John Ndiso and Elias Biryabarema; Compiled by Chris Mfula; Editing by Andrew Cawthorne)