Zambian currency under pressure, Kenya stagnates
The Zambian currency is expected to come under pressure against the US dollar next week, while Kenyan and Nigerian units hold steady.
The kwacha is expected to remain under slight pressure against the dollar next week as demand for hard currencies for the holiday season continues to outweigh supply.
On Thursday, commercial banks quoted the currency of Africa’s second-largest copper producer at 16.5250 to the dollar compared to 16.3642 at the close of business a week earlier.
“The local unit is under pressure from reduced dollar injections from the central bank and increased appetite for holiday imports,” a commercial bank trader said.
The Kenyan shilling is expected to remain stable next week due to moderate market activity during the holiday season, traders said.
Commercial banks quoted the shilling at 112.95 / 113.15 to the dollar, from last Thursday’s close at 112.90 / 113.10.
“We expect the Kenyan shilling to remain stable, supported by calm activity in the market due to the holidays,” said a trader at a commercial bank.
The Ugandan shilling is expected to strengthen over the coming week, supported by slowing demand for dollars, with most businesses closed for the holiday season.
At 2:00 p.m. GMT, commercial banks quoted the shilling at 3,535/3,545 to the dollar, from last Thursday’s close of 3,560/3570.
“The general tone is in the direction of strengthening,” said an independent forex trader in the capital Kampala, adding that the local unit will likely oscillate in the 3,520-3,530 band in the coming days.
The Nigerian naira was held stable over the next week in the unofficial market where it trades more freely, as demand for hard currency falls due to the holiday season, traders said.
The currency strengthened to 570 naira to the dollar in the parallel market on Thursday, from 575 naira a week ago. In the official market, commercial banks quoted the currency in a range of 409 to 415 against the dollar.
“I think we’re going to end the year at the same level,” said one trader. “We were hoping the central bank would clear the backlog (of dollar demand), which did not happen.”
Nigeria is grappling with a dollar shortage caused by low oil prices, following disruptions from the Covid-19 pandemic.