Large dollar sales by oil companies should help Nigeria's naira hold onto recent gains, while low liquidity in Kenya is expected to aid its shilling currency, which is close to a four-month high. .
| Currencies of different countries |
NIGERIA
The naira is seen gaining more ground against the greenback as oil companies operating in Africa's top crude exporter sell more dollars.
The local unit was trading around 158.7 to the dollar at 1117 GMT, firmer than its 159.65 close last Thursday. The currency closed at 158.95 to the dollar on Wednesday.
Traders said higher-than-expected hard currency flows from some oil companies this week have helped boost dollar liquidity and provided support for the naira.
"Dollar liquidity remains strong because of the unusual volume of dollar flows from some energy companies this week and we see the trend continuing to next week," one dealer said.
A unit of Royal Dutch Shell sold a large amount of dollars to banks twice this week, while Chevron sold $100 million on Tuesday and Total about $130 million on Thursday, traders said.
"More dollar inflows are still expected from other oil companies that are yet to come to the market ... The naira should sustain its gains at this level or trade within the band of 158.5-159.20 next week," another dealer said.
KENYA
Tight money market liquidity is expected to lift Kenya's shilling <KES=> towards a four-month high of 84.50 per dollar in coming sessions.
The shilling was trading at 84.55/75 per dollar by 0946 GMT, firmer from 84.75/95 at close of trading last Thursday.
Heavy demand for Kenyan government debt and equities from offshore and local investors in recent weeks has drained shillings from the market. Payment of annual bonuses to tea farmers this week has also contributed to the squeeze.
"I don't think it (liquidity) will improve soon because on Monday we expect 16 billion shillings ($188.8 million) to go out in bond payments, and the central bank seems determined to stay out of the market," Kenya Commercial Bank trader Nahashon Mungai said.
UGANDA
Increased buying of dollars in the interbank market after the central bank increased liquidity is expected to weaken Uganda's shilling <UGX=>.
At 1051 GMT commercial banks quoted the currency of Africa's leading coffee exporter at 2,528/2,533 to the dollar, weaker than last Thursday's close of 2,510/2,515.
A market note from KCB Uganda said high liquidity suggested "a bearish tone for the local currency going forward".
The Bank of Uganda has been injecting liquidity into the market using reverse repos.
"We've seen some healthy appetite (for dollars) in the interbank ... it might keep the shilling on the weaker side," said Faisal Bukenya, head of market making at Barclays Bank. He added that the shilling could trade in the 2,525-2,545 range.
TANZANIA
Tanzania's shilling <TZS=> is seen extending its gains against the dollar in the next week, buoyed by inflows from agriculture and tourism and a slowdown in dollar demand from the energy sector.
Traders in Tanzania's commercial capital Dar es Salaam quoted the shilling at 1,599/1,609 to the dollar on Thursday, stronger than 1,608/1,613 a week ago.
"Oil importers have not been aggressively buying dollars due to the ongoing stability in power supply in the country, and there are inflows coming in from the agriculture and tourism sectors," said Emmanuel Mwasanguti, a dealer at CRDB Bank.
"At the same time, corporates are also selling dollars to meet their end-of-month obligations."
Market participants said they expected the shilling to trade in the 1,590-1,600 range over the coming days.
The Bank of Tanzania traded $36.1 million on the interbank foreign exchange market in the last week, it said on its website.
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