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WEAKAHEAD-AFRICA-FX-Uganda, Kenya currencies seen softening

Published 07/01/2021, 15:01
Updated 07/01/2021, 15:06
WEAKAHEAD-AFRICA-FX-Uganda, Kenya currencies seen softening
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LUSAKA, Jan 7 (Reuters) - Ugandan, Kenyan and Nigerian
currencies are likely to come under pressure against the US
dollar next week as Tanzania and Zambia's hold steady.
UGANDA
The Ugandan shilling UGX= is seen weakening in the coming
week as banks and importers stock up on dollars amid concerns of
possible violence as Ugandans prepare to go to the polls.
Elections in the east African nation are set for Jan. 14 and
incumbent Yoweri Museveni is facing a tough challenge from
youthful pop star, Bobi Wine.
At 0816 GMT, commercial banks quoted the shilling at
3,695/3,705 compared to last Thursday's close of 3,640/3,650.
"There's too much fear of the unknown about what may happen
in the election week," said a trader at a leading commercial
bank.
"I think we'll see a lot of players moving to hedge risks by
going heavy on the dollar side."
KENYA
The Kenyan shilling KES= is expected to remain under
pressure in the coming week amid demand for dollars from the
energy sector while supply from remittances and exports is
projected to remain subdued.
Commercial banks quoted the shilling at 109.45/109.65,
compared with last Thursday's close of 109.20/109.40.
"We expect that demand will still be there but I am not
expecting any inflows until at least mid-January and onwards,"
said a trader at one of the commercial banks.

TANZANIA
Tanzania's shilling TZS= is expected to hold steady next
week as inflows from mining exports keep pace with dollar demand
from the energy and manufacturing sectors.
Commercial banks quoted the shilling at 2,314/2,324 on
Thursday morning, the same levels recorded a week earlier.
"We are not foreseeing major changes next week on the
shilling,” a trader at one of the commercial banks in Dar es
Salaam said.
"We expect some inflows from the mining sector next week
which is likely to match with the demand for dollars from oil
and manufacturing importers."
ZAMBIA
The kwacha ZMW= is expected to remain range-bound against
the dollar next week as market movements continue to be dictated
by demand and supply.
On Thursday, commercial banks quoted the currency of Africa's
second largest copper producer at 21.1800 per dollar from a
close of 21.1400 a week ago.
“There are no major activities that could move the kwacha
from the current levels,” independent financial analyst Maambo
Hamaundu said.

NIGERIA
The naira NAFEX=FMDQ is seen weaker on the
over-the-counter spot market next week after the currency fell
sharply last week and as dollar demand rises in the wake of
eurobond repayment due this month.
The naira, which eased 11.2% in 2020, hit a record intra-day
low on Wednesday of 413.05 per dollar on the spot market, quoted
by foreign investors, market data showed. It was quoted at 470
naira on the black market, where it trades more freely.
Traders say the naira is likely to come under renewed
pressure as activity pick up after the holiday season, testing
central bank's ability to defend the currency. Nigeria is also
due to repay a $500 million eurobond this month.
The naira is quoted at 381 to the dollar on the official
market, a level set in July and backed by the central bank.

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