October 26, 2017 / 3:37 PM / 2 years ago

WEEKAHEAD-AFRICA-FX-Kenyan shilling flat ahead of election re-run outcome, kwacha under pressure

NAIROBI, Oct 26 (Reuters) - Kenya’s shilling is expected to trade sideways as markets await the outcome of its presidential election re-run, while the Zambian kwacha is likely to gradually weaken on the back of importer demand for hard currency.


The Kenyan shilling is likely to tread water for a few days in the week ahead as the market awaits the outcome of a re-run of a presidential election that was boycotted by the opposition.

The shilling was trading at 103.70/90 per dollar in Tuesday’s session. Markets were closed on Wednesday and Thursday to let voters cast their votes in the election, which was marked by running battles between police and opposition supporters in some areas.

“People will be cautious but if things turn out right we will see a major rally,” said a senior trader at a commercial bank.

He said the outcome would be clear once the final result is announced.


The kwacha is likely to remain under pressure due to sustained demand for hard currency by importers stocking up for the festive season.

At 0835 GMT on Thursday, the commercial banks quoted the currency of Africa’s No.2 copper producer at 10.0000 per dollar from a close of 9.7200 a week ago.

“We expect to see further gradual moves higher, with moves downwards determined mainly by supply as demand is consistent,” First National Bank (FNB) said in a note.


The naira is expected to remain stable across its multiple exchange rates as the currency hit a resistance level for investors and the central bank continues to intervene on the official market, traders said.

The local unit has hit resistance at 360 naira for investors as banks are not willing to bid the U.S. currency below that level and as foreign investors continue to buy bonds at attractive yields, boosting dollar liquidity.

On the official market the naira has been quoted at around 305 per dollar for more than three months and is expected to trade at this level next week.

The government sold bonds at an auction on Wednesday while the central bank was offering treasury securities on Thursday to draw foreign inflows. The naira has traded flat on the parallel market at around 363, mirroring rates for investors.


Ghana’s cedi could rally against the dollar next week on inflows for a six billion cedi ($1.36 bln) energy bond to be issued on Friday, analysts said.

The local currency has been fairly steady in recent weeks on improved liquidity, supported by targeted central bank dollar sales. It was trading at 4.3752 to the greenback at 1125 GMT on Thursday compared to 4.3749 a week ago.

“In the week ahead, the local currency is likely to firm up on inflows for this week’s 6 bln cedi energy bond issue, underpinned by a growing investor confidence in the economy,” Joseph Biggles Amponsah of the Accra-based Dortis Research said.


The Tanzanian shilling is expected to remain trading in a stable range with a bias toward appreciation, helped by dollar inflows from the agriculture sector.

Commercial banks quoted the shilling at 2,245/2,250 to the dollar on Thursday, barely changed from 2,240/2,250 a week ago.

“Demand for dollars is more or less matched by supply at the moment. The shilling is seen stable over the coming week and it could strengthen slightly thanks to month-end inflows and exports of cashew nuts,” said a trader at CRDB Bank.


The Ugandan shilling is expected to trade in a stable range over the coming days helped by slowing demand from importers and expectations of a central bank intervention.

At 0947 GMT commercial banks quoted the shilling at 3,650/3,660, unchanged form last Thursday’s close.

David Bagambe, trader at Diamond Trust Bank, said most importers had stocked up sufficient amounts of dollars in a wave of demand in recent days. “We’re seeing appetite start to recede.”

The central bank had also signalled a willingness to step in if the shilling weakened sharply, which he said would, “buttress confidence in the shilling.” The local currency would oscillate between 3,625-3,675 over the next one week, he said. (Reporting by Duncan Miriri, Chris Mfula, Chijioke Ohuocha, Kwasi Kpodo, Fumbuka Ng’wanakilala, Elias Biryabarema; compiled by Tanisha Heiberg; editing by Peter Graff)

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