The Kenya and Tanzania shillings are projected to hold steady against the dollar in the coming week to Wednesday, while the Ugandan currency is seen firming, dealers said.
KENYA: The Kenyan shilling is expected to remain in a tight range in the coming week on light demand by importers balanced by inflows from exporters. The local unit has weakened slightly in the week to trade at 77.95/78.05 compared with last Wednesday's close of 77.80/90.
"There's been a slight pick up in demand from importers," said Kennedy Butiko, deputy treasury head at Bank of Africa. Central Bank of Kenya had stayed out of the market this week but came in on Wednesday to buy $8 million. This caused the rate to depreciate to 78.05/15, past the 78.00 resistance level. The shilling however clawed back some ground after demand by exporters intent on taking advantage of the depreciation.
Dealers said importers were seeking less dollars due to suppressed purchasing power and this would keep the exchange rate between 77.80 and 78.30. "It will take some time for it to move from around this level. 78 is providing support and resistance," said Friday Mwafuga, head of trading at Co-operative Bank. Dealers said there could be more importer demand for the greenback in coming weeks. Some had postponed activity ahead of the budget presentation to parliament earlier this month.
TANZANIA: The Tanzania shilling is forecast to be stable and possibly firm helped by companies selling the US currency to prepare for tax payments. Commercial banks quoted the local currency at 1,317/1,322 per dollar compared with 1,297/1,3309 at last Wednesday's close. The shilling is expected to trade in the 1,325-1,330 range in coming days.
"The central bank has been supplying dollars for the period. Demand was a little bit slowed down. Also, the market is short of dollars," said Yono Mtengule at National Bank of Commerce. "This is a period when we normally see customers dump dollars to meet government requirements in terms of taxes." Dealers said during the week the local unit eased slightly despite the companies' dollar sell-off.
"I thought it would come down because of the tax obligations. In terms of inflows we don't have any," said Gilbert Mwandimila, treasury manager at Bank of Africa Tanzania. Bank of Tanzania has traded $25.25 million on its Interbank Foreign Exchange Market since Thursday.
UGANDA: Uganda's shilling is seen appreciating due to US currency sales from offshore investors and end-month inflows from non-governmental agencies. Commercial banks posted the local unit at 2,095/2,105 per dollar compared with 2,155/2,165 a week ago. Dealers forecast the shilling in the 2,070-2,120 range in the week ahead.
"We are likely to see a stronger shilling in the next few days. Most buyers have covered their obligations for this month," said Denis Mashanyu, a dealer at Standard Chartered Bank Uganda. Traders said there was offshore interest in Wednesday's auction of a three-year treasury bond worth 60 billion shillings.
The local unit firmed this week to trade at 2,080/2,090 on Monday due to increased inflows from donor agencies and offshore investors. Central bank said in its monthly bulletin that the shilling had appreciated by about 3.5 percent in June.
Comments
Comments are closed.