Commodities

WEEKAHEAD-AFRICA-FX-Nigeria naira seen steady, Kenyan shilling may gain

Credit: REUTERS/AFOLABI SOTUNDE

Nigeria's naira is seen trading on an even keel amid a move to curb transactions while the Kenyan shilling may firm as tax payments trim demand.

LAGOS, Oct 15 (Reuters) - Nigeria's naira is seen trading on an even keel amid a move to curb transactions while the Kenyan shilling may firm as tax payments trim demand.

NIGERIA

The naira is seen stable next week as banks limit foreign exchange transactions by both firms and individual buyers on the unofficial black market to curb speculation, traders said.

The naira was slightly weaker on the black market on Thursday at 462 per dollar from 457 a week ago. It was quoted on the official market at 381 per dollar.

The central bank has employed several methods to help support the currency in the wake of lower prices for oil, Nigeria's main export.

The bank has tried to curb import demand to spur local production in addition to rationing dollar supply. The naira traded at 386.38 on the over-the-counter spot market NAFEX=FMDQ, widely quoted by investors and importers, on volumes in excess of $29.53 million on Wednesday

KENYA

The Kenyan shilling KES= is seen strengthening as commercial banks get ready to meet their tax obligations and cash reserves requirements.

On Thursday, commercial banks quoted the shilling at 108.55/75, compared to last week's close of 108.40/60.

"Two factors will be at play over the coming week as banks are getting ready to meet their tax obligations and also their cash reserves requirement ratios for the cycle which could lead to strengthening of the shilling," said a trader at one of the commercial banks in the capital Nairobi.

"But demand for the dollar from importers may offset the strengthening."

UGANDA

The Ugandan shilling UGX= is seen softening in the coming days as a typical surge in demand for hard currency in the last quarter of the year starts to kick in.

At 1039 GMT commercial banks quoted the shilling at 3,705/3,715, compared to last Thursday's close of 3,700/3,710.

"I think we'll start to see demand climb, in keeping with the trend that we tend to see around late October all the way to December," said an independent forex trader in the capital Kampala.

Typically fuel companies and other importers spur demand for dollars in October and November to pay for higher volumes of shipments to meet holiday season demand.

TANZANIA

Tanzania's shilling (TZS=) is expected to hold steady as hard currency inflows from agricultural exports absorb demand pressure from manufacturers and oil importers.

Commercial banks quoted the shilling at 2,315/20 on Thursday from an average of 2,315/25 recorded a week earlier.

"The large contributors of dollars next week are likely to be exports of spices, cashew nuts and cotton. This will cushion the exchange rate against dollar demand from manufacturing and energy sectors," Terry Karanja, a treasury associate at AZA, a Nairobi-based FX trading firm told Reuters.

ZAMBIA

The kwacha ZMW= is expected to come under pressure against the dollar next week as hard currency demand surges after tax payments.

On Thursday, commercial banks quoted the currency of Africa's second largest copper producer at 20.1100/20.2120 per dollar from a close of 20.0350 a week ago.

"It should come under pressure next week after the end of VAT (Value Added Tax) payments on Monday," one financial analyst said.

(Reporting by Omar Mohammed, Chris Mfula, Nuzulack Dausen, Chijioke Ohuocha, Elias Biryabarema; compiled by Elias Biryabarema; editing by Emelia Sithole-Matarise)

((Email:elias.biryabarema@thomsonreuters.com; Tel. +254 20 499 1232; Reuters Messaging: elias.biryabarema.thomsonreuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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