Zambia’s currency is expected to face pressure against the U.S. dollar next week, while the Kenyan and Nigerian units hold steady.
The kwacha is likely to remain under mild pressure against the dollar next week as festive season demand for hard currency continues outweigh supply.
On Thursday, commercial banks quoted the currency of Africa’s second largest copper producer at 16.5250 per dollar from 16.3642 at the close of business a week earlier.
“The local unit is under pressure due to reduced dollar injections from the central bank and increased festivity import appetite,” one commercial bank trader said.
Kenya’s shilling is expected to remain stable next week due to subdued market activity during the festive season, traders said.
Commercial banks quoted the shilling at 112.95/113.15 per dollar, compared with last Thursday’s close of 112.90/113.10.
“We expect the Kenya shilling to remain stable underpinned by quiet activity in the market due to the holidays,” said a trader at one commercial bank.
The Ugandan shilling is seen firming in the coming week, buoyed by a slowdown in demand for dollars as most businesses will be closed for the festive season.
At 1400 GMT commercial banks quoted the shilling at 3,535/3,545 per dollar, compared to last Thursday’s close of 3,560/3,570.
“The overall tone is in the direction of strengthening,” said one independent foreign exchange trader in the capital Kampala, adding the local unit will likely swing in the 3,520-3,530 band in the coming days.
The Nigerian naira was seen flat next week on the unofficial market where it trades more freely, as demand for hard currencies drop due to the holiday season, traders said.
The currency firmed to 570 naira per dollar on the parallel market on Thursday, from 575 naira a week ago. On the official market, commercial banks quoted the currency in a range of 409-415 against the dollar.
“I think we are going to close the year at same level,” one trader said. “We were hoping that the central bank would clear outstanding backlog (in dollar demand), which has not happened.”
Nigeria is battling dollar shortages brought on by low oil prices, following disruptions linked to the Covid-19 pandemic.