Kenyan shilling, Zambia kwacha seen as vulnerable in coming week

The Kenyan and Zambian currencies are expected to come under pressure in the coming week, due to increased demand for the U.S. dollar following the Christmas and New Years holidays.

KENYA

The shilling is forecast to weaken next week due to an expected increase in dollar demand from the manufacturing and energy sectors.

The shilling was trading at 102.40/50 on Thursday afternoon, weaker then last Thursday’s close of 102.25/35.

“I have a bias for a weaker shilling. Next week, demand has to pick up. Some companies which closed down for the year which are expected to open on Monday, especially manufacturing, oil,” said a trader at one commercial bank.

ZAMBIA

The kwacha is likely to come under pressure versus the dollar next week due to increased demand for the green back after the holidays.

At 0701 GMT on Thursday, commercial banks quoted the currency of Africa’s second-largest copper producer at 10.8999 per dollar from a close of 10.8603 a week ago.

“The kwacha is forecast to trade with a slightly bearish tone in upcoming sessions, weighed down by stronger dollar demand from importers,” Zambia National Commercial Bank analysts said in a note.

NIGERIA

Nigerian naira is seen flat on both the parallel and official interbank markets next week, on weak dollar demand and as businesses gradually wind down operations to prepare their books for their financial year ending.

The local currency traded at 266 to the dollar on the parallel market on Wednesday, from 272 a dollar last Thursday and a low of 280 to the dollar by last Friday. The currency traded at 199.5 to the dollar on the official market, some 1.26 percent weaker than the central bank’s peg rate.

“The naira should trade flat next week because of weak demand from end users and businesses closing down operations for the year end,” a trader said.