African currencies outlook: tourism inflows to buoy Kenya, Tanzania shillings

Kenya and Tanzania's shillings are set to benefit from dollar inflows from their tourism sectors as the safari season reaches its peak. In Ghana, the cedi is expected to strengthen next week ahead of a 5-year bond auction open to foreigners.
Kenya's shilling is seen firming slightly in the days ahead, helped by the central bank's aggressive mop up of liquidity via repurchase agreements (repos) and dollar inflows from a peaking tourism season. Commercial banks quoted the shilling at 84.05/15 per dollar, barely changed from last Thursday's close of 84.00/20.
"Liquidity had been a concern, but with the central bank taking it out aggressively this week we could see the shilling firm slightly," said one trader. Traders said they expect the shilling to trade in the 83.60-84.20 range, supported by dollar inflows from the tourism sector as it peaks in August.
The peak period for Kenyan tourism, which earned a record $1.2 billion in 2011, stretches between July and August, mainly due to the influx of tourists who come to watch the world famous wildebeests migration in the Maasai Mara reserve. Tanzania's shilling is expected to gain ground against the dollar in the days ahead, buoyed by inflows from the tourism and agriculture sectors and subdued demand for the greenback.
Commercial banks in Dar es Salaam quoted the shilling at 1,574/1,579 to the dollar on Thursday, stronger than 1,572/1,582 a week ago. "We have seen a lot of inflows from corporate clients, especially from tourism," said Hamisi Mwakibete, head of trading at Commercial Bank of Africa, Tanzania. "There are also some inflows from the agriculture sector with the ongoing cotton season, although it is not (at its) peak yet."
Traders said they expect the shilling to trade in the 1,570-1,580 range in the coming days. The Ghana cedi is expected to consolidate its recent gains against the dollar next week on light corporate demand for the greenback and a 300 million cedi ($155 million) 5-year bond sale on August 23 open to foreign investors.
Jacob Brobbey, a trader at Barclays Bank Ghana, said the cedi, which gained 0.28 percent to 1.9395 to the dollar during Wednesday's session, is expected to appreciate further in the week. The cedi opened Thursday's session at 1.9380/05 to the dollar on the interbank market.
"We are slightly bullish on the local unit next week. We expect the cedi to trade the broad 1.9300-1.9400 band but cedi may potentially break higher on the back of the 5-year bond auction," Brobbey said, adding that there was likely to be more cedi buying ahead of the auction. Uganda's shilling is forecast to tread water against the dollar over the next week, but an exit of offshore investors from the government debt market could put pressure on the local currency.
Commercial banks in Kampala quoted the currency of Africa's leading coffee exporter at 2,485/2,495, weaker than last Thursday's 2,475/2,485. "Uganda will not be seeing a lot of offshore guys...as rates go down these guys will be moving to higher-yielding markets like Nigeria and Ghana," said Denis Mashanyu, trader at Standard Chartered Bank.
The naira is expected to remain stable at around 157 to the dollar, supported by the central bank's measures to tighten liquidity and inflows from offshore investors buying Treasury bills. The local currency was trading at 157.10 to the dollar on the interbank market, firmer than the previous day's close of 157.25. Traders said the local currency could trade around similar levels next week.