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The Nigerian naira is seen strengthening in the week, lifted by
dollar flows from the energy sector, and the Ugandan shilling is expected to
weaken if food and fuel price protests persist, traders said. Nigeria

Nigeria’s naira could strengthen on expectations of large dollar
inflows from energy companies and the conclusion of presidential elections that
saw President Goodluck Jonathan retain his position.

The naira was trading at 154.65 to the dollar last week but
dealers said the election of Mr Jonathan was a positive signal that there would
not be any major policy shift. “We see confidence returning to the economy and
possible foreign investors gradually considering some level of investment in
the country with the successful completion of the presidential election,” one
currency trader said.

Dollar demand has been persistently high in the run-up to the
elections as businesses and wealthy Nigerians took long positions to hedge
against the risk of instability around the polls. “Now we are not expecting any
significant shift in policy. That is good for planning and also confidence in
the economy,” another trader said. The state-run energy company and some multinational
firms are also expected to offload dollars as part of their month-end sales
cycle, which would boost supply and help support the local currency, traders
said.

Kenya

The Kenyan shilling is seen easing marginally against the
greenback next week with anticipated dollar demand from the energy sector,
while inflows were not expected to offer a major boost to the local currency.
Vimal Chudasama at Chase Bank said he expected dollar demand to pick up and
weaken the shilling slightly. “I don’t see inflows from agriculture and tourism
sector from the Easter period affecting the shilling much,” said Mr Chudasama.

Some traders see the shilling getting some reprieve from rising
local interest rates, which typically attract offshore investors seeking
relatively better returns by holding Kenyan government securities. Dickson
Magecha, a senior trader at Standard Chartered Bank, said yields were expected
to continue rising, boosting the local currency.

Uganda

The Ugandan shilling was slightly weaker against the dollar on
Thursday, and traders said it could ease further if protests over rising food
and fuel prices persist.

Commercial banks quoted the shilling at 2,373/2,378 to the
dollar, weaker than last Thursday’s close of 2,353/2,358. Protests over rising
food and fuel prices erupted in the country’s capital for the fourth time on
Thursday, and opposition leader Kizza Besigye was remanded until April 27 for
participating in an unlawful assembly. “If the protest persists, I see the
shilling weakening further because it could deter any major (dollar) inflows,”
said Peter Mboowa, a trader at Kenya Commercial Bank Uganda. “I expect it to go
to 2,400 next week if the protest persists. We have very minimal inflows at the
moment.”

Traders said demand from the oil and telecom sectors could
further weigh on the local currency next week. “Business demand will normally
come from the energy sector and telecoms sector,” said Ali Abbas, a trader at
Crane Bank. Traders expected the shilling to trade in the 2,370-2,400 range
against the greenback in coming days.

Tanzania

The Tanzanian shilling is expected to hold steady and to
strengthen in coming months as export proceeds from coffee and cashew nuts
start coming in. Commercial banks quoted the shilling at 1,510/1,515 to the
dollar, the same as last week’s close. “There is some demand but the central
bank has been providing support to stabilise the market,” said Hakim Sheikh, a
trader at Commercial Bank of Africa, Tanzania.

Traders said the shilling will likely trade around the 1,510
levels in the coming week. “Looking forward, we expect the shilling to remain
firm and strengthen in June and July when dollar inflows from coffee and cashew
nut exports come in,” said Msafiri Absolom, a trader at Tanzania Investment
Bank. In the week to Wednesday, the central Bank of Tanzania traded $21.25
million on its Interbank Foreign Exchange Market, according to statistics on
its website.

Ghana

The cedi strengthened 0.89 percent against the dollar for the
week-to-date, pushing it to three-month highs, driven by bank and offshore
investor demand for local currency ahead of a 320 million cedi bond issue set
for April 27.

The cedi was quoted at 1.4965/90, from Wednesday’s close of
1.4985/1.5010. “We see immediate support at $1.4900, a breach of it will
quickly expose the 2011 open levels of $1.4800 in the coming sessions,” Jacob
Brobbey, a trader at Barclays Bank Ghana, said in an email.

Analysts expect the bond to be oversubscribed, with over 90
percent soaked up by foreign investors. But, the short-term gains will not
diminish underlying policy concerns, said Sampson Akligoh from investment house
Databank. “I think that the gains will be inevitable during the bond season,
but as the inflows on the back of the bond dries up, the intra-day losses and gains
will re-emerge,” Mr Akligoh said by email.

Christopher Nettey from Stanbic Bank said the yield on the bond
to come in at 12.5-13 percent.

Zambia

The kwacha is expected to remain stable against the dollar in
the week to next Thursday due to balanced demand and supply for the local unit
and the United States (US) currency.

Commercial banks on Thursday quoted the kwacha at 4,685 from
4,695 a week ago.

“We expect this to hold because demand and supply is balancing
and we see nothing significant to tip this balance,” one trader said. Zambia’s
currency met firm resistance around 4,600 during 2010. On the few occasions it
breached that level, it went on to test but failed to breach 4,550.

REUTERS