The naira could inch up next week as uncertainty eases for foreign investors, following the conclusion of the presidential and National Assembly elections, traders had said.
Nigerian and Kenyan currencies are seen firming against the United States dollar in the coming week, while Zambia’s kwacha is likely to recoup losses and the Ugandan shilling is seen weakening, according to Reuters. The naira firmed to 360.65 per dollar on the over-the-counter market for investors on Thursday, up from 361.50 a week earlier.
On the official market, the naira was quoted at 306.80 against the greenback, supported by the Central Bank of Nigeria. Foreign investors have piled into bonds to lock up yields as high as 15 per cent.
Traders expect more inflows into the bond market, especially after a debt auction this week attracted more than 10 times the amount the government had offered to sell. “There’s a lot of foreign interest in bonds and that’s helping the naira strengthen. I expect more flows next week as yields remain attractive at current levels,” one trader was quoted as saying. Zambia’s kwacha is likely to recover its losses against the US dollar next week despite sustained hard currency demand from importers in the agriculture, retail and wholesale sectors.
At 1120 GMT on Thursday, commercial banks quoted the currency of Africa’s second-largest copper producer at 12.0000 per dollar, down from a close of 11.9400 a week ago.
“At these levels, we are likely to see increasing dollar supply from sellers trying to maximise profit and this should help the local currency,” one commercial bank trader said. The Kenyan shilling is seen firming against the dollar in the coming week, supported by hard currency inflows from diaspora remittances and horticulture exports amid thin demand from oil importers, traders said.
Commercial banks quoted the shilling at 100.00/20 per dollar, compared with 100.10/30 at last Thursday’s close. “Due to the huge dollar supply, it looks like the path of least resistance is still strengthening our local currency…demands is weak even at end month,” said a senior trader from one commercial bank. The Ugandan shilling is seen weakening in the coming days on the back of a rebound in demand by some firms looking to pay 2018 dividends.
At 1046 GMT, commercial banks quoted the shilling at 3,695/3,705, compared to last Thursday are close of 3,665/3,675. A trader at a leading commercial bank said most foreign owned-firms tend to pay the previous year’s dividends around March and that demand for dollars was expected to pick up as these firms prepare to effect those payments. “This demand will keep the shilling biased on the weaker side,” he said. Punch
Pix: Nigeria N1,000 notes