Mixed fortunes ahead for key regional currencies

Kenya’s currency is this week expected to trade on the back foot against the US dollar as Uganda’s firms and those of Nigeria, Tanzania and Zambia hold steady.

The Kenyan shilling is seen under pressure in the coming week from oil importers and some multinational companies buying dollars to meet their monthly obligations, traders said.

In early trading last Thursday, commercial banks quoted the shilling at 106.70/90 per dollar, compared with 106.00/20 at the previous week’s close.

“There will be increased demand from mid-month... next week we expect to see oil importers making payments,” said a senior trader from one commercial bank.

The Ugandan shilling is expected to trade with a firming tone versus the dollar as mid-month tax payments trim demand by some importers.

In early trading last Thursday, commercial banks quoted the shilling at 3,730/3,740 against the dollar, compared to the previous week’s close of 3,765/3,775.

“Demand will be minimal since we have tax payments, that will probably keep the local unit biased on the stronger side,” a commercial bank trader said.

Tanzania’s shilling is expected to hold steady this week, drawing support from improving economic activity as coronavirus restrictions gradually ease.

Commercial banks quoted the shilling at 2,309/2,319 on Thursday, the same levels recorded the previous week.

“We expect the impact of Covid-19 to start easing in upcoming weeks,” a trader at a leading commercial bank said, adding this would help the local currency. Nigeria’s naira is seen range-bound across markets this week, traders say, after the central bank last week revised the currency rate on the futures market amid dollar shortages plaguing the economy.

The naira opened at 387.50 against the dollar, a range at which it has traded since this month. On the official market, backed by the central bank, the naira was quoted at 361.