Zambia, Kenyan, Nigerian currency expected to fall against dollar

Zambia, Kenyan, Nigerian currency expected to fall against dollar

LUSAKA, Nov 25 Reuters -- The Zambian, Kenyan and Nigerian currency is expected to fall against the U.S. dollar in the coming week, as Uganda's firms and Tanzania hold steady.

The kwacha is likely to remain in the back foot next week against the dollar due to the tight supply of hard currency amid high demand despite this week's monetary policy tightening.

Commercial banks quoted the currency of Africa's second largest copper producer at 17.7200 per dollar, from 17.5700 at the close of business a week ago.

We expect Kwacha to remain on a weak path next week and will likely close the week in the range of ZMW 17.80 -- 17.85 Zambia National Commercial Bank ZANACO.

The central bank of Zambia has raised interest rates by 50 basis points to 9.0% in order to bring down stubbornly high inflation, with price rises only seen falling within the bank's target range in 2023, Governor Denny Kalyalya said on Wednesday.

The Kenyan shilling is expected to trade with a weaker bias due to elevated demand for dollars meeting with insufficient supplies.

There are some inflows from charities, remittances and commodities but they are not enough to meet existing demand, a trader at a commercial bank said. The Nigerian naira is expected to relax on the black market in the coming week, after the currency fell sharply on the spot market at Thursday's intra-day session, traders said.

The currency fell by 8.5% against the dollar to 449.25 naira on Thursday. It later firmed to 411.75 naira, but remained weaker on the black market, where it trades more freely, at 565 naira against the dollar.

The inflows into the market are drying up and demand is resurging, a trader said, adding that the central bank is intervening to keep the official rate stable.

On Tuesday, the World Bank urged the central bank to improve its exchange-rate management in order to speed up other reforms. It said that the naira's black market premium was fuelling inflation.

The Ugandan shilling is expected to rebound on the back of typical month-end dollar inflows from exporters of commodities.

Commercial banks had quoted the shilling at 3,555 3,565, compared to the close of 3,570 3,580 last Thursday.

A Kampala-based independent foreign exchange trader said that the local unit might make some gains but overall I anticipate that they will be modest.

Tanzania's shilling is expected to hold steady, with inflows from investors and agricultural exports matching with demand from the manufacturing and energy sectors.

Commercial banks quoted the shilling at 2,294 2,310 on Thursday, unchanged from last week's close.

Terry Karanja, a treasury associate at AZA, said that he expects a stable shilling over the coming days as demand for dollars from the manufacturing and energy sectors is matched by inflows from investors and agricultural exports.