World Markets

WEEKAHEAD-AFRICA-FX-Nigeria's naira seen as pressured, Kenyan shilling may gain from bond sale


Nigeria's naira is expected to trade with a weakening tone while the Kenyan shilling could post gains, underpinned by inflows into a government bond auction.

NAIROBI, Sept 9 (Reuters) - Nigeria's naira is expected to trade with a weakening tone while the Kenyan shilling could post gains, underpinned by inflows into a government bond auction.

NIGERIA Nigeria's naira NGNP= is seen as easing next week on the black market, with dollars hard to come by, traders said.

The naira dropped to a new low of 540 to the dollar on the black market on Thursday. The naira has been hitting new lows since July.

"Availability of dollars has completely dried up," one trader said.

A central bank director said on Tuesday the bank is worried about boosting dollar supply on the currency market, and not the valuation of the naira.

Commercial banks quoted the dollar at 412.50 naira for retail transactions, around the official rate NGN=, which has been trading within a range since June.


The Kenyan shilling KES= is expected to inch up against the dollar in the next week, benefiting from hard currency inflows into a government infrastructure bond.

Commercial banks posted the shilling at 109.90/110.10 per dollar on Thursday, unchanged from a week earlier. The central bank sold 106.75 billion shillings ($972.67 million) worth of the bond, which is popular among foreign investors due to its tax free status.

The gains from the expected inflows could however be curbed by short-covering among banks, and pent-up demand for dollars for importers who have been waiting for the shilling to strengthen, said a senior currency trader at a commercial bank.


The kwacha ZMW= is likely to post some gains against the dollar next week, supported by corporate firms selling hard currency in preparation for tax payments.

On Thursday, commercial banks quoted the currency of Africa's second-largest copper producer at 16.1650 per dollar from 16.0500 at the close of business a week ago.

"The kwacha should gain because VAT (Value Added Tax) is due on Thursday next week," one commercial bank trader said.


Tanzania's shilling TZS= is expected to hold steady next week, with expected hard currency inflows from an IMF loan helping to balance demand from energy, construction and transport sectors.

Commercial banks quoted the shilling at an average of 2,314/2,324 on Thursday, the same levels recorded a week before.

"We expect the shilling to remain stable over the coming week, as the IMF's financing support is balanced by demand for dollars from imports," Terry Karanja, a treasury associate at AZA, a Nairobi-based FX trading firm, said.

Much of the demand, he said, would come from importers of consumer and capital goods like transport equipment, building and construction materials and oil.

This week the IMF announced it had approved loan request worth$567 million.


The Ugandan shilling UGX= is expected to trade with a slightly weakening tone, with traders anticipating a gradual pick up in appetite from merchandise importers.

At 1218GMT commercial banks quoted the shilling at 3,520/3,530, unchanged from last Thursday's close.

"From September toward end-October we typically tend to see a surge in importer demand," said an independent foreign exchange trader in the capital Kampala, adding he expected that seasonal demand to start kicking in in the coming days.

($1 = 109.7500 Kenyan shillings)

(Reporting by Duncan Miriri; Chijioke Ohuocha; Chris Mfula; Nuzulck Dausen and Elias Biryabarema; Compiled by Elis Biryabarema; Editing by Angus MacSwan)

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