THE WEEK AHEAD - AFRICA

PRODUCED BY REUTERS Compiled on Friday, August 12, 2011

MARKET SNAPSHOT
SPOT CURRENCY vs USD
Close of Thu % chg week % chg month % chg YTD S.Africa Nigeria Kenya Ghana Zambia Mauritius Uganda
7.185 154.00 93.25 1.5312 4970.00 27.60 2750.00 -4.64 -1.06 -1.09 -1.16 -3.01 0.00 -3.38 -7.68 -0.85 -2.81 -1.42 -3.76 1.08 -5.28 -8.87 -1.35 -15.84 -3.28 -3.97 7.38 -17.67

WHAT TO WATCH NEXT WEEK

Monday August 15 Nigerian July inflation due from Monday. Inflation reached a more than three-year low of 10.2 percent in June, but the average forecast of analysts polled by Reuters was for a rise to 10.7 percent in July. Zimbabwe July inflation data due. It rose to 2.9 percent in June and is expected to climb in the last quarter of the year as the effects of the re-introduction of customs duty on some basic consumer products kick in. About 220,000 South African municipal workers and workers in the water sector will strike countrywide. Municipal workers turned down a 6 percent salary increase. Finance Minister Pravin Gordhan will outline South Africas five-year economic outlook at a conference. (0630 GMT) Tuesday August 16 Zimbabwean President Robert Mugabe and Prime Minister Morgan Tsvangirai attend Southern African Development Community summit in Angola, where they are expected to report on progress to holding elections. Malawi opposition groups behind protests last month have given President Bingu wa Mutharika until August 16 to respond to demands for talks about problems including shortages of fuel and foreign exchange. Wednesday August 17 Statistics South Africa releases June retail sales data. Growth in retail sales was flat in May at 0.0 percent yearon-year at constant prices from an upwardly revised 10.0 percent rise in April. Bank of Mauritius auctions a new 5-year Treasury bond. This auction is one of four 5-year bond sales in 2011 worth an aggregate nominal amount of 6.6 billion rupees. Thursday August 18 South Africas National Union of Mineworkers and Anglo American Platinum, the world's biggest platinum producer, to resume wage talks. The union seeks a 15 percent increase. The company has offered 6 to 7 percent.

EQUITY MARKETS
Close of Thu % chg week % chg month % chg YTD S.Africa Nigeria Kenya Ghana W.Africa Zambia Mauritius
26297.69 22390.45 3519.28 1098.88 150.43 4006.88 1935.70 0.07 -5.71 -6.02 2.75 -0.45 -2.10 -4.74 -5.60 -6.03 -5.86 3.04 0.50 -0.93 -4.50 -8.18 -9.61 -20.60 9.97 -5.45 21.28 -1.61

COMMODITIES
Close of Thu % chg week % chg month % chg YTD
Gold Platinum Brent Cocoa ICE Coffee Copper 1765.90 1782.00 108.02 1834.00 240.85 8881.00 7.16 3.74 0.72 0.05 2.12 -5.07 8.59 0.45 -8.07 -0.97 0.54 -9.65 24.41 0.82 14.01 -9.07 0.15 -7.49

YIELD CURVES

TOP NEWS OF THE WEEK

S.Africa health plan will need billions Kenya may tighten limit on banks' forex holdings Nigeria's SEC suspends trading on nationalised banks Ghana inflation falls to lowest since 1992 Malawi awaits decision on IMF aid programme revival Global risks hit S.Africa capital formation -cbank Ghana to raise public sector wages by 20 pct - finmin Zimbabwe reduces penalties on ownership transfer law Mozambican cbank cuts lending rate to 16.0 pct Ugandan police fire teargas at Besigye's supporters Namibia CPI slows to 4.8 pct in July - stats agency

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THE WEEK AHEAD - AFRICA

August 12, 2011

TOP NEWS
S.Africa health plan will need billions PRETORIA, Aug 11 - Plans to introduce national health insurance, one of the biggest changes proposed by South Africa's ruling African National Congress, will require an estimated 125 billion rand in 2012 and 214 billion rand by 2020, a government source said on Thursday. The National Health Insurance programme, being discussed by the government and other parties in South Africa's healthcare system, will require an estimated 255 billion rand by 2025, the source said, citing a policy paper due to be released on Friday. Nigeria's SEC suspends trading on nationalised banks LAGOS, Aug 7 - Nigeria's Securities and Exchange Commission said on Sunday it had suspended trading on the shares of Afribank, Spring Bank and Bank PHB, following the nationalization of the three lenders. The SEC also approved a technical suspension on the trading of Finbank, Intercontinental, Oceanic Bank and Union Bank shares, pending the completion of agreed recapitalization deals. The Nigerian central bank revoked the licences of Afribank, Spring Bank and Bank PHB on Friday because it said they did not show the necessary capacity to recapitalize following a $4 billion bailout of nine lenders in 2009. Malawi awaits decision on IMF aid programme revival LILONGWE, Aug 9 - Malawi has yet to see whether its decision to devalue the kwacha will enable stalled loan negotiations with the International Monetary Fund to resume, the country's central bank governor said on Tuesday. Malawi has devalued the kwacha by about 10 percent against the U.S. dollar to 165, although the new rate is still well short of the currency's value on the black market, where it is worth around 185 to the dollar. Ghana to raise public sector wages by 20 pct - finmin ACCRA, Aug 9 - Ghana will boost public sector wages 20 percent this year as part of a drive to reform government salaries, Finance Minister Kwabena Duffuor said on Tuesday. The increase, which follows a 10 percent wage hike last year, is likely to stir inflation concerns in the West African state where oil revenues are forecast to drive double-digit economic growth this year. "It is the negotiated annual increment exclusively for the public sector -- the objective is to enhance the baseline of the Single Spine Salary Structure," Duffuor told Reuters, referring to the government's wage reform effort. Mozambican cbank cuts lending rate to 16.0 pct MAPUTO, Aug 11 - Mozambique's central bank said it reduced its lending rate by 50 basis points to 16.0 percent, citing "challenges" in some key sectors of the economy. "The deliberations of the board took into consideration the objectives of economic growth, inflation forecasts for short and medium term and the important challenges that persist in some sectors, with significant weight in the growth of GDP," the Bank of Mozambique said in a statement. CAPE TOWN, Aug 10 - Fixed capital formation in South Africa -- crucial to the country's economic growth -- has been hit by the climate of uncertainty stemming from global financial turmoil, the Reserve Bank said on Wednesday. But bank officials told members of parliament that consumer spending was expected to underpin growth in the economy even as external uncertainties remain. "Elevated uncertainty is not the friend of fixed capital formation and that is what South Africa dearly needs," Johan van den Heever, senior deputy chief economist at the central bank told legislators during a presentation on the Reserve Bank's quarterly bulletin originally released in June. Zimbabwe reduces penalties on ownership transfer law HARARE, Aug 11 - Zimbabwe has reduced penalties for foreign companies that violate a government mandate to sell a majority of their shares to locals, according to a government notice obtained on Thursday. Penalties for offences including falsifying shareholdings and company valuations will range from three to twelve months in jail, down from the previous five years imprisonment, the notice said. Zimbabwe has given foreign-owned mines up to Sept. 30 to transfer a majority shareholding to local blacks under a 2008 law driven by President Robert Mugabe's ZANU-PF party. Ugandan police fire teargas at Besigye's supporters MASAKA, Uganda, Aug 10 - Ugandan police fired teargas on Wednesday to disperse thousands of supporters of opposition leader Kizza Besigye who had gathered to hear his renewed calls for protests against high food and fuel prices. The east African nation was rocked by widespread antigovernment protests in April and May, sparked by rising prices. At least nine people were killed in the government's clampdown and Besigye was arrested and badly beaten by security agents. Kenya may tighten limit on banks' forex holdings NAIROBI, Aug 8 - Kenya may cut the amount of foreign currency banks are allowed to hold, the central bank said on Monday, as it seeks ways to stem a steep decline in the value of the country's shilling. The local currency has lost 16 percent against the dollar this year, battered by falling appetite for riskier currencies in frontier markets like east Africa and a perception that the country's monetary policymakers have fallen behind the curve. Central Bank head Njuguna Ndung'u said commercial banks had been given plenty of leeway in the amount of funds they could hold in foreign currencies as a percentage of core capital, and this might be reviewed. Ghana inflation falls to lowest since 1992 ACCRA, Aug 10 - Ghana's annual inflation rate fell to its lowest since 1992 in July, potentially paving the way for new cuts in interest rates in the West African state. Consumer price inflation dipped to 8.39 percent from 8.59 percent in June, the fifth consecutive monthly decline, Ghana's statistical office said on Wednesday. The drop comes ahead of a Bank of Ghana Monetary Policy Committee review of policy rates later this month. Global risks hit S.Africa capital formation -cbank

THE WEEK AHEAD - AFRICA

August 12, 2011

TOP NEWS
Namibia CPI slows to 4.8 pct in July - stats agency JOHANNESBURG, Aug 11 - Namibia's consumer inflation slowed to 4.8 percent year-on-year in July from 5.4 percent year-on-year in June, the Central Bureau of Statistics said on Thursday. Monthly inflation however quickened to 0.6 percent from 0.2 percent in June, the statistics agency said in a statement. POLL-Nigeria growth seen steady, inflation to stay high ABUJA, Aug 11 - Nigeria's economy is expected to grow 7.5 percent this year before slowing slightly in 2012, while inflation is seen stuck in double-digits, a Reuters poll showed on Thursday. The poll of 11 economists forecast growth in sub-Saharan Africa's second-largest economy could slow to 7.2 percent next year. Nigeria's gross domestic product grew an estimated 7.85 percent in 2010. The forecast for growth this year is in line with a poll in February and above the government's projection of 7 percent in this year's budget. Nigeria's central bank is expecting 7.8 percent growth this year. POLL-Angola economic growth seen at 7.1 pct in 2011 LISBON, Aug 11 - Angola's economy is seen growing at a median 7.1 percent this year, with strong oil prices and an improved performance in the non-oil sector compensating for lower-than-expected crude output, a Reuters poll showed on Thursday. Still, five of nine common contributing economists surveyed lowered their forecasts from a poll in February -- in which the median was 7.3 percent -- citing a decline in oil output during the first half.

PICTURE OF THE WEEK

Turkana men sail their fishing boats near the shores of Lake Turkana, Kenya.

POLL-Uganda economy to grow 6.3 pct in 2011 KAMPALA, Aug 11 - Uganda's economy will expand by 6.3 percent this year, accelerating to 7.6 percent in 2012, benefiting from the emergence of a fledgling oil industry that should ensure strong mid-term growth, a Reuters poll showed on Thursday. But the picture will be clouded by high rates of inflation, high deficits and a weak shilling currency, the poll of 10 economists found. The East African country has enjoyed a decade of strong growth on the back of a boom in its construction and retail sectors and a stable macroeconomic policy.

INSIGHT
Nigerian economic reform heavyweights set for tussle By Joe Brock ABUJA, Aug 11 - Nigeria's Central Bank Governor Lamido Sanusi and former World Bank chief Ngozi Okonjo-Iweala will spearhead the immediate future of Africa's third-largest economy, but how they deal with tensions between them will determine their success. Okonjo-Iweala is expected to arrive this month to take the role of Coordinating Minister for the Economy and Minister of Finance, an expanded version of the role she held between 2003 and 2006 when she successfully secured Nigerian debt relief. Sources close to the process say she negotiated clear terms on which she would be willing to return to serve in government, including being given broad powers over economic management and freedom from political meddling. She is a big personality, well respected internationally and her appointment was met with widespread optimism from foreign investors, diplomats and Nigerians, but Sanusi has an equally impressive profile. Sanusi has spread his remit well beyond the fundamental role of the central bank, raising his public profile and laying out a blueprint for reforming the Nigerian financial system, an area Okonjo-Iweala will be wanting a strong hand in. "It will be an interesting dynamic as they are both very strong characters," said Kayode Akindele, partner at Lagos-based advisory firm JMH-TIA Capital. "The central bank has encroached on areas that have traditionally been the remit of the ministry of finance since Sanusi became governor and Okonjo-Iweala will want to take back the initiative in those areas." Since taking over office two years ago Sanusi was named central bank governor of the year by The Banker and was listed in Time magazine as one of the most influential people of 2011. Okonjo-Iweala has her own high-profile awards, named one of the world's hundred most powerful women by Forbes in 2006. A month after taking office Sanusi sacked the heads of nine banks in an unprecedented $4 billion bailout. The banks were deemed to be so badly capitalised they posed a risk to subSaharan Africa's second-largest economy. In his latest bold move, Sanusi supported the nationalisation of three Nigerian banks last week, well before a recapitalisation deadline of September 30 set by the central bank and before the arrival of Okonjo-Iweala. BANK NATIONALISATION The pre-emptive move has been supported by economists and market sources, who see it as bringing the banking crisis

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August 12, 2011

INSIGHT
closer to a conclusion, but has also prompted a terrible week for banking stocks, although a feared run on the banks has not materialised. "Although debate over the authorities' pre-emptive action continues, it is difficult to see the justification for not taking action ahead of the end-September deadline," said Razia Khan, head of Africa research at Standard Chartered. "In stepping in early to safeguard a small number of institutions and guarantee their deposits, may have protected the wider financial system. From this perspective, there were few arguments in favour of delaying intervention." Fiscal and monetary policy priorities always throw up differences of opinion, particularly on the balance between keeping a lid on inflation, a priority for Sanusi, and the need for economic growth, a priority for most finance ministers. Sanusi has been a staunch supporter of the local naira currency, pumping U.S. dollars into the financial system to curb depreciation. When asked about the naira in her screening, Okonjo-Iweala said she supported the action but also said it was not a long-term solution. However, the pair share many common goals. Okonjo-Iweala has pledged to tighten fiscal policy and ensure the country "lives within its means." Sanusi was hauled before lawmakers last year to explain his own comments that parliamentary overheads were too high. Africa's most populous nation faces a long list of economic hurdles, not least opaque government spending, rampant corruption, import dependence, and the need to tame double-digit inflation while creating jobs and building infrastructure. Okonjo-Iweala's return means she will need to work with, not just Sanusi, but other successful reformers including Mustapha Chike-Obi, head of the AMCON state "bad bank," and SEC boss Arunma Oteh, who have turned Nigeria's financial markets inside out over the past two years. Sanusi and Okonjo-Iweala clearly have the ability to drive forward reforms vital for Nigeria's future but they will need to quickly settle areas of potential conflict and mark out their territories or their combined strengths will go to waste. Ivory Coast finances in good shape for debt repayment By Tim Cocks ABIDJAN, Aug 9 - Ivory Coast's finances are in much better shape than authorities were predicting when it emerged from civil war in April, and with tax revenues beating forecasts, there is no doubting it can pay defaulted external debt by early next year. But in the longer run, the markets may punish Finance Minister Charles Koffi Diby's decision to continue defaulting on relatively small payments even after its crisis ended in May -- harming its future borrowing prospects. The West African state, in default for more than six months on its $2.3 billion Eurobond coupons, said last month it would not be able to service external debt this year, and would resume payments to bondholders only next year. The bond was launched in April last year to repackage defaulted brady bond debt. It matures in 2032. "This year, our fiscal policy has not been aggressive because we needed to help businesses get back on their feet in a difficult situation," Diby said last week, explaining his unwillingness to let creditors have their dues immediately. The council of ministers passed a 3.05 trillion CFA franc budget in June for the rest of 2011, and Diby pledged to tackle high public debt when he released his budget strategy to local investors last Thursday. Few were surprised when Ivory Coast defaulted on what was supposed to be the bond's first $29 million coupon in December, in the midst of a violent power struggle between ex-president Laurent Gbagbo and current President Alassane Ouattara. But after Gbagbo was ousted in April, commercial creditors had assumed Ouattara would want to normalise relations with them as soon as possible -- especially considering this debt has already been restructured twice because of past defaults. Its arrears have since doubled because of a default in June. Meanwhile, government revenues have consistently beaten its dire projections, raising eyebrows in the markets. "Many economic figures seem to be understated," said Standard Bank emerging market strategist Samir Gadio. "The stats are well above projections, not as bad as authorities expect." Tax revenue in Ivory Coast was a third higher in the past three months than authorities anticipated -- totalling 284 billion CFA francs ($627 million) by July 25, compared with a projected 213 billion CFA francs. And some figures in the budget look worse than they are. For instance, debt service owed this year is equal to 42 percent of total spending. That sounds like a lot, but almost two thirds of that figure is short-dated treasury bills, which most countries don't count in their one-year budget cycle. In addition to robust revenues from import tax, oil and export taxes on what is likely to be a record cocoa harvest, donors will contribute 437.3 billion CFA francs to plug budget holes until the end of the year. "The total amount of the Eurobond coupon is so marginal. There's no doubt that if they wanted to pay it, they could do it, probably at the expense of other expenditure, but it could be done," Gadio said. "Frankly, commercial debt doesn't seem a top priority." "CAN'T AVOID IT FOR LONG" IMF country representative, Wayne Camard sees the default as a "consolidation" move, aimed at marshalling resources for recovery,in comments echoed by Diby and which some analysts took as a tacit IMF green light for his decision. Camard said the economy had since bounced back quicker than expected. Industrial output was almost back to normal by May. Some are even starting to ask whether the negative growth forecast assumed in the budget of 6.3 percent is too gloomy. "GDP in (Ivory Coast) is 51 percent exports. Their assumptions of negative growth were based on a quarter of exports being lost, but that doesn't seem to be the case," said StrategiCo's Lydie Boka, adding that the main export cocoa is surging ahead of last year, swelling government coffers. Based on the improving picture, Boka expects the government to start repayments quickly in 2012. "They're aware they can't avoid it for too long. They can pay and they want to, so I'd expect it by January," she said, adding that most other sovereign debt "is going to be written off anyway" when it completes its debt relief programme. There are longer term risks: if the global economy goes back into recession, commodity prices on which Ivory Coast is heavily dependent may continue to fall as they have in recent days. And there's always a risk Ivory Coast may delay payments until after debt relief, but if it did creditors may lose patience and sue to accelerate the bond, demanding it all back. "I think creditors are being patient for now, but if they keep defaulting next year, that might start up some litigation," said a London-based emerging market bond strategist.

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INSIGHT
Yet even when Ivory Coast does move out of default, the fact it continued not to pay when it did have the money may make borrowing very expensive down the line. The last time it failed to pay this debt, in 2000, it was also judged able to do so. "Their track record is ... they don't pay when they are able to," Gadio said. "So when they come back on professional terms, they're going to pay the price: market confidence will be low." S.Africa's strike season hitting economy hard By Marius Bosch JOHANNESBURG, Aug 10 - A wave of strikes in South Africa has cost goldminers around $190 million in lost output, curtailed the already struggling manufacturing sector and could trim third quarter economic growth by up to 0.6 percent, analysts said. Africa's biggest economy is nearing the tail-end of its annual "strike season" which saw gold, coal and diamond miners, and fuel, paper and pharmaceutical workers all downing tools for higher wages. Although most industries have reached settlements -- well above the annual inflation rate of 5 percent -- tens of thousands of municipal workers will strike from Aug. 15, and power utility Eskom is in talks with unions in a bid to avert industrial action in the key electricity sector. Analysts say this year's wage talks across all sectors were more severe than in previous years and recruitment group Adcorp said the number of work days lost to strikes in 2011 could jump over 20 percent to nearly 18 million from 14.6 million last year. Unlike other years when the majority of industrial action took place in the public sector, 68 percent of strikes this year were in the private sector, Adcorp said. "The strikes in 2011 represents a worrying trend for businesses and investors as the 'strike season' now seems to have become an annual event with strikes also taking place in a number of sectors in both 2009 and 2010," said Mike Davies, associate director at London-based risk analysis group Maplecroft. FUELLING INFLATION? A worrying trend is that wage settlements this year again overshot inflation. In some sectors increases were double the inflation rate and analysts fear this could stoke inflation when the central bank is concerned the rate could breach its 3-6 percent target range. "The wide differential between inflation figures and the increases demanded by unions and the weak relationship between wage increases and productivity gains are also concerning," Maplecroft's Davies said. Quantifying the direct cost of the strikes is difficult, especially when the global economic slowdown and sluggish South African domestic recovery needs to be take into account. Nomura International emerging markets economist Peter Attard Montalto said the industrial action could shave off 0.3-0.6 percent of headline economic growth in the third quarter. Gold mining companies lost close to 118,000 ounces in production during the miners' strike -- worth around $190 million based on an average spot gold price of around $1,600 per ounce. With a sluggish economic recovery and unemployment sticking at around 25 percent of the workforce, the outlook for the labour market is not encouraging. Employers have responded to increasing wage bills by shedding jobs. Despite record high precious metals prices, the mining sector in South Africa -- the world's largest platinum producer and fourth-largest gold producer -- lost 31,000 jobs in the second quarter, government data said. Attard Montalto wrote in a recent blog post that wage growth should be kept down to encourage job growth at this stage of the economic cycle. "But this is the fundamental issue -- unions in South Africa do not care about the unemployed and do not care about the fact that they negotiate wages above the market clearing rates. Restrictive labour laws allow them to get away with this and government is happy to let this happen," he said. President Jacob Zuma's government has little political will to keep union demands under control as the ruling African National Congress is in an alliance with the country's biggest labour federation, COSATU, which has delivered millions of votes for the party. South African labour is already costly and inefficient compared with other emerging economies, with the typical South African factory worker earning about six times more than the average Chinese factory worker and being less productive. The country has some one of the world's most rigid labour markets, according to the World Economic Forum. The strikes also took its toll on the manufacturing sector, the second biggest contributor to GDP with about 17 percent. South Africa's Purchasing Managers' Index fell for a fourth straight month in July and sponsor Kagiso Securities said the business activities component fell nearly 20 points -- mainly due to the strikes. Moody's Analytics economist Mekael Teshome said the prospects for an improvement in manufacturing is waning. "The July strikes will likely weaken demand for factory goods going into August. Even though major union strikes have recently been resolved, spillover into other sectors cannot be ruled out."

THE WEEK AHEAD - AFRICA

August 12, 2011

FOREX
Kenyan shilling to recover from low NAIROBI, Aug 11 - Kenya's shilling is expected to firm against the dollar next week after recovering from an all-time low, bucking a trend in African currencies which are under additional pressure because of the global flight from riskier assets. KENYA Kenya's shilling is seen firming against the dollar after the central bank said on Wednesday it would stop injecting liquidity through reverse repurchase agreements. The shilling recovered from an all-time low of 95.10 against the dollar on Tuesday. Traders said they expected liquidity to tighten further in the coming week as value added taxes fall due by Aug 20. At 1424 GMT, commercial banks quoted the shilling at 93.25/55 against the dollar, weaker than last Thursday's close of 92.20/40. "The central bank's move is going to calm the foreign exchange market. Liquidity is going to be affected but that is a price we need to pay," said Solomon Alubala, head of trading at Co-operative Bank of Kenya. Traders said they expected interest rates to rise as liquidity tightens further in the money market. The weighted average rate for overnight borrowing on the interbank market crept up to 6.7429 percent, from 6.5148 percent on Wednesday. Borrowed volumes jumped to 6.73 billion shillings ($71.5 million) from 4.36 billion shillings. "Either we pay a price on the exchange rate or we pay a price in interest rates, which are definitely going to rise," added Alubala. UGANDA Uganda's shilling looks likely to extend its losses against the dollar in the coming week and could test a new key psychological level of 2,800 due to surging greenback demand. However, traders said central bank action could stem the slide. At 0920 GMT commercial banks in Kampala quoted the local currency at 2,765/2,775, significantly down from last Thursday's close of 2,670/2,680. Demand for the U.S. dollar, mainly from the manufacturing and energy sectors, continues to exert pressure on the local currency and traders said they expected that pressure to continue through the coming week. "The biggest problem is that supplies remain very low while the market is hungry for dollars, so unless the central bank intervenes, the shilling will be kept heading downward," said Lucas Ochieng, head of treasury at Orient Bank. He said the local currency was finding its support and resistance levels at 2,745 and 2,800 respectively. "If dollar demand is maintained at the same pace, with no corresponding inflows, the local currency is likely to weaken further," said Stanbic Bank Uganda in a market report. Faisal Bukenya, head of market making at Barclays Bank Uganda, said while the shilling was likely to shed more value, a central bank sale of dollars could slow its slide. TANZANIA Tanzania's shilling weakened against the dollar on Thursday, with traders expecting it to remain within a tight range in the coming days as they keep an eye on oil imports. Commercial banks quoted the local currency at 1,616/1,622 to the dollar, compared to 1,590/1,598 at last week's close. "The shilling is still weakening ... most of the corporate clients have stayed out of the market feeling that the rates might go down in the near future, so no one is willing to buy dollars at these levels," said Hamisi Mwakibete, head of trading at Commercial Bank of Africa Tanzania. "We might see the currency trading in these same levels next week or go down a little bit. As demand keeps on shrinking, the rate might adjust itself accordingly." Traders said they expected the shilling to trade in a tight 1,600-1,610 range in the coming days. "There is usually slow trading in the holy month of Ramadan. But if huge demand comes in from the oil sector or elsewhere, then the shilling could lose further ground from its current resistance level," said Hadija Osman, a trader at African Banking Corporation Tanzania. ZAMBIA The kwacha is expected to remain under pressure next week as investors flee emerging market assets and because of a slowdown in China's economy. The currency of Africa's largest copper producer shed more than 3 percent over the week to 4,980 against the dollar on Thursday and traders said it was likely to fall further. "We expect the Kwacha to continue tumbling," said Stanley Tamele, head of financial markets at Standard Chartered Bank Zambia, in a research note. "Initial resistance level for USD/ ZMK now stands at psychological barrier of 5,000. A break above this level should pave way for 5,080." The kwacha fell to a near one-year low at 5,015 against the dollar on Tuesday. The currency, which has traded in a 4,6004,800 band for most of the last 12 months, closed at 4,955 on Monday. Analysts attribute the currency's weakness to a sharp fall in copper prices as well as political nervousness ahead of Sept. 20 elections. Tamele added: "Kwacha bears will be worsened by continued portfolio outflows as we move closer to elections. Forecast range is 4900-5100 in the very short term (from now until election time) and the ZMK should close the year in the 4800 - 4900 range." NIGERIA The naira is expected to weaken further against the U.S. dollar next week as greenback supplies gradually thin out. Most of the oil companies in Nigeria sell dollars to banks every month to fund their domestic obligations, but traders said many had finished sales for the month. The naira was trading at 153.95 to the dollar on the interbank market on Thursday, stronger than the 154.04 at Wednesday's close. "The naira is expected to weaken next week as dollar liquidity thins out -- unless there are surprise sales by the oil companies," one trader said. The central bank sold only $250 million at 150.75 to the dollar on the interbank on Wednesday, short of the $369.3 million demanded and $450 million sold at 150.50 to the dollar on Monday. Traders said the naira could trend to around 154-154.20 next week. GHANA The cedi is expected to depreciate further on the back of increased corporate demand for U.S. dollars, traders said. After a 0.59 percent fall on Tuesday, the cedi regained ground when the central bank intervened by selling dollars to banks for onward sales to corporates.

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FOREX
Chrisopher Nettey of Standard Bank quoted the cedi-dollar rate at 1.5345/70 at 1140 GMT on Thursday and said that the currency had been trading flat since the market opened. Jacob Brobbey of Barclays Bank said central bank intervention had helped stabilise the currency but added that it was possible the cedi would depreciate due to increased demand for dollars. "The cedi-dollar could potentially trade above 1.5400 in the coming week on demand pressures," he said. The cedi had appreciated in July in the lead up to a 5-year, 300 million cedi bond auction in which bonds had to be paid for in local currency, but began to gradually depreciate shortly after.

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