October 5, 2017 / 2:18 PM / 10 months ago

WEEKAHEAD--AFRICA-FX Politics may weigh on Kenyan shilling

NAIROBI, Oct 5 (Reuters) - The Kenyan shilling may come under pressure next week, as the market casts a wary eye on political developments less than three weeks before national elections.


Subsiding end-month demand for dollars should offer some support to the Kenyan shilling, but pre-election jitters could offset that, traders said.

Commercial banks quoted the shilling at 103.10/30 per dollar, compared with 103.25/45 at last Thursday’s close.

“The risk factor of the election could affect trading strategies, but otherwise I see the market remaining stable,” said a trader from a commercial bank.


The kwacha is likely to firm in the coming week supported by falling demand for dollars and hard currency conversions by companies preparing to pay taxes.

Commercial banks quoted the currency of Africa’s No.2 copper producer at 9.6200 per dollar firm a close of 9.6300 a week ago.

“We see the local unit making further gains in the week ahead owing to reduced demand for the greenback on the local market and continued dollar conversions for tax obligations,” the Zambian branch of South Africa’s First National Bank (FNB) said in a note.


The Ugandan shilling is seen facing downward pressure in coming days, as Tuesday’s interest rate cut by the central bank fuels demand for hard currency.

Commercial banks quoted the shilling at 3,605/3,615, weaker than last Thursday’s close of 3,600/3,610.

“I think after the CBR (Central Bank Rate) move, we’ll see negative sentiment toward the local unit,” Benon Okwenje, a trader at Stanbic Bank, said.

He said the shilling was likely to trade in a 3,605-3,615 range.


The Tanzanian shilling is expected to trade in a tight range over the coming days, but with a weakening bias as demand for dollars from traders and the energy sector exerts pressure.

Commercial banks quoted the shilling at 2,246/2,250 to the dollar on Thursday, weaker than 2,240/2,250 a week ago.

“There is pressure on the shilling from oil companies and other importers. If inflows of U.S. dollars that are now mostly coming in from mining companies dry up, the shilling could weaken next week,” said a trader at CRDB Bank.


Ghana’s cedi is seen firm against the dollar next week on improved offshore forex inflows, an analyst said.

The cedi closed September at 4.4100 to the dollar. It was trading at 4.4000 to the greenback on Thursday, compared to 4.4019 a week ago.

“There is improved forex liquidity, helped by (a) cocoa loan drawdown which we believe could stimulate the market,” Accra-based currency analyst George Buame said.


The naira is seen slightly weaker next week with investors trying to push it lower to make up for falling yields on the debt market and the central bank intervening to boost dollar liquidity, traders say.

Foreign investors traded the naira at 363 per dollar on Wednesday before it firmed to close at 360, traders said. They have been offering the naira lower to mirror black market rates at 363.

On the official market, the naira was quoted at 305.65, after it traded $2.87 million. The central bank has been selling $500,000 daily to lenders. (Reporting by Elias Biryabarema, Chijioke Ohuocha, John Ndiso, Kwasi Kpodo, Chris Mfula and Fumbuka Ng’wanakilala, compiled by Maggie Fick; editing by John Stonestreet)

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