JOHANNESBURG Thu Nov 28, 2013 10:38am EST
JOHANNESBURG Nov 28 (Reuters) - There is more volatility in store for the Ghanaian cedi as dollar demand shows no sign of abating, while in Nigeria the naira is likely to strengthen against the dollar in anticipation of large dollar sales by state energy firm NNPC.
GHANA
Ghana's cedi is likely to remain volatile next week amid strong end-of-year dollar demand and low liquidity.
The cedi was trading within a band of 2.2600-2.2900 against the dollar at 1215 GMT on Thursday.
"The Ghana cedi was fairly volatile throughout the week on the corporate FX market amid strong end-of-year demand and weak supply," said Adu-Koranteng Yaw, research analyst at NDK Asset Management in Accra.
"The local unit is expected to remain volatile on the market next week particularly to the dollar as we see no signs of an improvement in liquidity in the market," he said.
The central bank said on Wednesday it would introduce new foreign exchange regulations including a uniform trade reporting platform for all banks and a code of conduct in an attempt to generate more transparency in pricing, price discovery and online reporting.
NIGERIA
The naira is expected to strengthen against the dollar on the interbank market next week in anticipation of dollar sales by state-owned energy firm NNPC.
At 1134 GMT, the naira was trading at 158.70 to the dollar, stronger than its 159.07 close a week ago.
"We expect the naira to gain to around the 158/dollar level next week because of possible dollar sales by the NNPC and other oil companies that are yet to come to the market," a dealer at Access Bank said.
NNPC supplies the bulk of dollars traded on the interbank market and, combined with supplies from energy companies and the central bank's monetary tightening measures, the naira has stayed in a 158-159 range against the dollar since last month.
KENYA
The Kenyan shilling is expected to hold steady next week, but there is a risk it could weaken on a general rise in dollar demand from corporate clients and increased shilling liquidity in the money markets.
At 1016 GMT, commercial banks quoted the shilling at 87.05/25 to the dollar, compared with last Thursday's close of 86.25/35.
The shilling touched 87.10 this week, close to a two-month low. It has lost 0.98 percent since last Thursday.
"We have a surge in corporate dollar demand amid very reduced inflows, improved (shilling) liquidity in money markets and the expectations of lower interest rates," said Joshua Anene, a trader at Commercial Bank of Africa.
A senior trader at another commercial bank said: "Looking forward, we expect the shilling to remain vulnerable and we don't rule out new lows."
Other traders say the shilling could hold steady, given that most businesses are beginning to wind down their activities ahead of the December holidays.
They expect the shilling to trade in the 86.75 to 88.00 range in coming days.
UGANDA
Uganda's shilling is expected to be rangebound over the next week albeit with a firmer bias on the back of month-end dollar inflows from non-governmental organizations.
At 0938 GMT commercial banks quoted the currency of east Africa's third-largest economy at 2,520/2,525, stronger than last Thursday's close of 2,530/2,535.
"The shilling will probably trade in a 2,520-35 range ... however we do anticipate some NGO (non-governmental organization) flows," said Faisal Bukenya, head of market making at Barclays Bank.
A trader from a leading commercial bank said the market would also take its cue from November inflation data due to be released on Friday and its impact on the Bank of Uganda (BoU) rate decision for December.
TANZANIA
Tanzania's shilling is likely to strengthen slightly next week, buoyed by dollar inflows from corporates and an expected liquidity squeeze on the local currency.
Traders in Tanzania's commercial capital Dar es Salaam quoted the shilling at 1,610/1,617 to the dollar on Thursday, marginally weaker than 1,606/1,616 a week ago.
"I foresee the shilling strengthening slightly against the dollar, helped by inflows from some non-governmental organisations and corporate entities," said Sameer Remtulla, a dealer at Commercial Bank of Africa Tanzania.
"As we are approaching the end of the month, we are seeing many clients offloading dollars to get shillings and we also expect to see a tightening up of liquidity on the local currency in the days ahead."
Traders said they expect the shilling to trade in a tight 1,610-1,613 range over the coming days.
The Bank of Tanzania said on its website it had traded $32.35 million on the interbank foreign exchange market over the past week.
ZAMBIA
The kwacha is likely to come under pressure next week as dollar demand increases ahead of the festive period.
At 1149 GMT on Thursday, commercial banks quoted the currency of Africa's leading copper producer at 5.500, barely changed from a week ago.
"Without any intervention by the government the kwacha should fall due to festive demand for the dollar," one commercial bank trader said. (Reporting by Matthew Mpoke Bigg, Oludare Mayowa, George Obulutsa, Elias Biryabarema, Fumbuka Ng'wanakilala and Chris Mfula; Editing by Tosin Sulaiman and Susan Fenton)
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