The Nigerian naira could weaken to its lowest level this year next week with no more central bank forex auctions scheduled, but other African currencies are seen stable or stronger as the holiday season approaches.

NIGERIA
The naira NGN=D1 is likely to weaken further next week and could hit its lowest level this year if it goes above 155 to the dollar, due to the seasonal closure of the official forex auctions and a lack of dollar inflows from other sources.

The local currency was trading at around 154.62 to the dollar on Thursday from 153.65 on Wednesday as increased dollar demand put the naira under pressure.

The central bank, which supplies the bulk of dollars to the foreign exchange market, held its final forex auction of the year on Wednesday, selling $800 million at 149.17 to the dollar, just below demand of $838 million.

“If there is no major inflow of dollars within the next few days, the naira will hit the roof,” one trader said, referring to the rate weakening above 155. Traders said there was speculation that the state-run energy firm NNPC could sell dollars in the next few days, which could provide some relief for the local currency.

GHANA
Ghana’s cedi GHS= is expected to trade stable until the end of the year at around 1.465-1.470 to the dollar as corporate demand for foreign exchange begins to wane in the run-up to Christmas, analysts said. The cedi has been under pressure in recent weeks with a seasonal scramble for dollars among local suppliers importing goods for the holiday shopping season.

Analysts said the cedi was trading at 1.4665-1.4690 late morning on the interbank. “It’s very stable and I expect this kind of stability to extend to the rest of the year,” said Jacob Brobbey from Barclays Ghana. “There’s barely 13 days to Christmas and you expect that all corporate imports have been done already, so the demand from corporate side which was pushing the rates should go down.”

ZAMBIA
The Zambian kwacha ZMK= is expected to be stable, moving between gains and losses with its performance being affected by happenings in the Euro zone as well as commodity prices. “We expect the Kwacha to be range-bound, trading between 4,600/4,750 U.S. per dollar,” said Mudenda Syamujaye, Treasurer at Cavmont Bank.

The local currency in Africa’s largest copper producer was trading at around 4,620 to the dollar on Thursday.

KENYA
The Kenyan shilling KES= is expected to hold steady against the dollar, thanks to slow market activity as the year winds down and corporate clients take a break.

Commercial banks quoted the shilling at 80.35/45 to the dollar at 1035 GMT on Thursday, compared 80.50/60 at last Thursday’s close. Traders said they expect the shilling to trade in the 80.25-80.75 range against the dollar in coming days.

“I don’t think much is going to happen. We’re getting into a period of limited flows. Once in a while, if there’s major news, or demand or supply, we are likely to see major swings,” said Ignatius Chicha, head of treasury at Citibank.

Traders said the market had weathered Wednesday’s ICC announcement naming three Kenyan cabinet ministers and a former police chief among six suspects behind the east African country’s post-election violence in 2008.

TANZANIA
The Tanzanian shilling TZS= strengthened sharply against the dollar on Thursday, with traders expecting it to make further gains in the week ahead due to low corporate demand. Commercial banks quoted the local currency at 1,426/1,434 to the dollar compared with 1,476/1,480 at the close of last Wednesday’s session. Tanzanian markets were closed last Thursday for a public holiday.

“The shilling has recorded a sharp appreciation. This is on the back of low demand in the market as well as a liquidity squeeze. Everyone was looking for shillings, so dealers decided to offload their dollars,” said Hamisi Mwakibete, head of trading at Commercial Bank of Africa Tanzania.

“We have also seen some dollar inflows coming in from non-governmental organisations and tourist activities. The shilling will likely appreciate further in the coming week.” Traders said they expect the shilling to trade in the 1,400-1,420 range in the coming days.

UGANDA
Uganda’s shilling UGX= is forecast to strengthen against the dollar driven by inflows from non-governmental organisations, but is expected to trade in a narrow range.

Commercial banks in Kampala quoted the shilling at 2,300/2,305, a marginal appreciation from last Thursday’s 2,307/2,313 to the greenback. “We’re seeing a considerable amount of dollars flowing from the NGO (non-governmental organisations) sector but there’s also demand in the interbank. I think in the days ahead the shilling is likely to keep firming, but within a narrow range,” said Mathew Mugisha, a trader at Barclays Bank Uganda.

He expected the shilling to trade around 2,290/2,300 in the week ahead. Phillip Ssali, a trader at Standard Chartered Uganda said corporations were building their dollar reserves to meet a range of year-end hard currency needs including cashing letters of credit and dividend payments to offshore shareholders. Traders said this demand would be more than met by dollar supplies from the aid organisations and agricultural sectors, and help keep the shilling in a relatively stable position.

Bad news for some, good news for others. My dollar will remain strong. I know my father is very happy. Now he can continue building another home in Owerri. However, it is sad how the Naira is decreasing in value not, because of our economy, but because of Nigerian Federal gov't policy.