Lagos, March 7 – Nigeria’s Naira seen gain against US dollar as foreign investors pile up bonds.
While Zambian currencies are likely to strengthen next week while Uganda’s is expected to remain stable, traders say.
The naira could gain further against the U.S. dollar next week as foreign investors continue to buy bonds at high yields, traders said.
The naira firmed to a high of 360.15 per dollar on the over-the-counter market for investors on Thursday, up from 360.65 a week earlier. On the official market, the naira was quoted at 306.90, supported by the central bank.
Foreign investors have been buying Nigerian bonds to lock up yields as high as 15 percent, helping boost dollar flows on the currency market.
“The market is very liquid. We haven’t heard that foreign investors have overweight Nigeria or that yields are running down fast,” one trader said.
The Kenyan shilling is seen firm against the U.S. dollar in the coming week due to inflows from offshore investors interested in buying government debt amid muted demand from the energy sector and merchandise importers, traders said.
Commercial banks quoted the shilling at 99.95/100.15 per dollar on Thursday, compared with 100.00/20 a week previously.
“If there is substantial foreign interest in the 25-year bond that has been floated, then 99.5 could become a reality,” said a senior trader from one commercial bank, referring to the shilling level. “Other factors remain the same … demand is muted.”
The kwacha may regain some of its losses against the U.S. dollar in the coming week due to decreasing demand for hard currency from importers.
At 1053 GMT on Thursday, commercial banks quoted the currency of Africa’s second-largest copper producer at 12.0000 per dollar from a month-high of 12.0400 a week ago.
“The dollar demand experienced last week has died down. We therefore could see the kwacha start to recoup some of its losses,” the local branch of South Africa’s First National Bank (FNB) said in a note.
The Ugandan shilling is seen broadly stable in coming days, partly supported by expected inflows from offshore investors targeting government debt auctions.
At 1014 GMT commercial banks quoted the shilling at 3,700/3,710, compared to last Thursday’s close of 3,698/3,708.
“We anticipate some dollar inflows to come through drawn by the debt auctions, that will lend support to the local currency,” said Robert Mpuuga, head of treasury at Bank of Africa, referring to pending Treasury bond and Treasury bill sales.
He said the shilling would likely swing between 3,690-3,720 over the next one week. (Reporting by John Ndiso, Chijioke Ohuocha, Chris Mfula and Elias Biryabarema; Compiled by Chris Mfula; Editing by Andrew Cawthorne)