The naira is set to remain on the back foot this week after hitting a seven-month low against the dollar on Thursday as offshore investors sell local debt.

Kenya’s shilling is also expected to trade in a narrow band ahead of the outcome of a petition challenging  the presidential election results.

The naira eased to its weakest level against the dollar in more than seven months on Thursday after some offshore investors sold off their debt holdings on fears the local currency could lose further ground.

The naira was trading at N159.65 to the dollar on the inter-bank market last Thursday, weaker than its N158.92 close the previous day.

Reuters quoted a dealer as saying, “The fear that the naira could hit N160 to the dollar in the near term is forcing many offshore investors to sell off their local debt holdings and repatriate their funds, putting the local currency under pressure.”

Nigeria has set N160 to the dollar as a benchmark for calculating its oil earnings in its 2013 budget, fuelling speculation in the market that the Central Bank of Nigeria could shift its naira to dollar exchange rate band.

The naira is expected to remain under strain unless there are significant dollar inflows from oil companies, another dealer said.

Meanwhile, the kwacha is expected to soften next week due to a strengthening of the dollar against other currencies and its long-term prospects are bleak given waning offshore investor interest in Zambian assets.

Source: Punch