LUSAKA, May 16 (Reuters) - Zambia’s currency is expected to continue trading with a bearish tone while the Kenyan shilling is likely to firm and Uganda’s currency should remain stable.
The kwacha is likely to remain under pressure in the coming week as major suppliers of U.S. dollars hold on to hard currency in anticipation of higher levels.
On Thursday, the currency of Africa’s second-largest copper producer touched a year-high of 13.6000 per dollar from a close of 12.8300 a week ago.
“(It) looks vulnerable to slide further as negative sentiments in part continue to weigh down,” the Zambia National Commercial Bank (ZANACO) said in a note.
The International Monetary Fund (IMF) has repeatedly warned that Zambia is struggling with high debts and shrinking foreign currency reserves.
The Kenyan shilling is expected to strengthen against the U.S. dollar due to tightening liquidity in the local money market and muted demand for the greenback from oil importers, traders said.
Commercial banks quoted the shilling at 101.00/20 per dollar, the same as last Thursday’s close.
“It’s the start of a new credit reserve ratio cycle for banks so liquidity can only get tighter...We could see the local currency gain against the dollar,” said a senior trader from one commercial bank.
The Uganda shilling is seen trading in a stable range as some players start to stay on the sidelines, loath to take positions ahead of the presentation of the national budget next month.
At 1056 GMT, commercial banks quoted the shilling at 3,765/3,775, compared to last Thursday’s close of 3,770/3,780.
“I don’t think we’ll have a lot of players taking positions in the days ahead of budget,” said a trader at a leading commercial bank.
Uganda’s finance minister is due to unveil the budget for the 2019/20 (June-July) financial year early next month but the date has not been fixed. (Reporting by Chris Mfula, John Ndiso, Elias Biryabarema; Compiled by Chris Mfula; Editing by Mark Heinrich)