Kenyan shilling firms against limp dollar, Naira remains flat

The Kenyan shilling was seen firming over the coming week on the back of sagging corporate demand for dollars, while the Nigerian naira was likely to stay flat due to central bank efforts to control the exchange rate.

Kenya

Kenyan shilling was seen firming up due to limp dollar demand from large companies.

Commercial banks quoted the shilling at 102.25/35 to the dollar, compared with last Thursday’s close of 102.15/25.

One Nairobi-based trader said corporate dollar demand has been weak and this was likely to carry on into next week.

“From the look of it, (the shilling) may strengthen. Demand is very weak,” said the trader.

A second trader expected the local currency to stay in a tight 102.00-102.40 range into next week.

Tanzania

The Tanzanian shilling is expected to strengthen slightly against the dollar in the days ahead, buoyed by inflows from cashew exports.

Commercial banks quoted the shilling at 2,155/2,165 to the dollar on Thursday, weaker than 2,150/2,160 a week ago.

“The shilling will likely appreciate slightly against the dollar next week on the back of the ongoing cashew nut export season and month-end inflows. We expect it to trade in the 2,140-2,150 range,” said Mohamed Laseko, a dealer at CRDB Bank.

Nigeria

The Nigerian naira is seen trading around the same level next week, as the central bank keeps a tight rein on the forex market.

The local currency was trading at 230 to the dollar on the parallel market on Thursday, the same level last week, while in the interbank market the local currency was trading at 198.97 to the dollar at 1204 GMT compared with 197 naira last week.

The central bank had adjusted its exchange rate peg more than 15 times since it introduced control in the interbank market in February in a bid to conserve its forex reserves. The naira peg rate has been adjusted between 198 and 196.95 to the dollar.

The central bank is expected to hold its Monetary Policy Committee meeting next Tuesday, but traders said not much change is anticipated from the meeting.

Uganda

The Ugandan shilling is forecast to weaken over the next week, hurt by a likely uptick in corporate dollar demand.

At 1116 GMT commercial banks quoted the shilling at 3,365/3,375, stronger than last Thursday’s close of 3,495/3,505.

“Corporate clients have been on the sidelines for days…some demand should start to materialise next week especially as end-month nears,” said a trader at a leading commercial bank.

The trader said the IMF’s lowering of Uganda’s 2015/16 growth projection to 5 percent from a previous 5.8 percent will also likely keep the shilling pressured.

Ghana

Ghana’s cedi could come under pressure in coming weeks on increasing dollar demand for seasonal imports ahead of the Christmas season.

The local currency has been fairly stable in the past three months after slumping nearly 30 percent in the first half of the year. It was trading at 3.8300 to the greenback at 1120 GMT on Thursday compared with 3.8000 a week ago, according to Thomson Reuters data.

“The usual demand for foreign exchange by importers towards settlement of bills marked for the festive season is growing, and it’s not certain yet whether the cedi would be able to withstand the rising demand,” Joseph Biggles Amponsah, analyst at the Accra-based Dortis Research, said.