East African currencies seen mostly steady

The Kenyan and Tanzanian shillings were seen holding steady against the dollar in the next week to Wednesday, while Uganda's currency was expected to weaken, traders said.
KENYA Kenya's shilling was expected to be steady with a bias to edge lower. Commercial banks quoted the local currency at 76.35/55 to the dollar, compared with last Wednesday's close of 76.00/10. The shilling hit a 6-1/2 month low of 77.10/20 against the dollar on Friday, undermined by the dollar's gains across the board versus other major currencies.
The dollar rose to a seven-month high against a basket of currencies, spurred by risk aversion on worries of fiscal problems in some euro zone countries, which increased the appeal for save haven currencies. The shilling has since recovered some ground.
"It's actually trimmed part of the losses...but still looking weak. This week it's actually been tracking the euro, and that has pulled the shilling down," said Omar Abdalla, a trader at Gulf African Bank. Traders said they expect the shilling to trade in the 76.00-77.00 in coming days. "I think the shilling is recovering. This is a correction," said Benson Kaburu, senior trader at Standard Chartered Bank.
TANZANIA The Tanzanian shilling was seen stable or marginally firmer, helped by sluggish demand from corporate clients. Commercial banks quoted the shilling at 1,348/1,351 to the dollar, compared with 1,350/1,355 at last Wednesday's close.
"The market is very quiet...here's a 50-50 chance that the shilling will slightly strengthen next week," said Hadija Osman, a trader at African Banking Corporation. Traders said dollar demand from telecommunications, manufacturing and oil sectors was subdued and supply for the US currency was minimal.
"We haven't seen a lot of inflows from agriculture coming in. There is only tobacco selling a bit," said Osman. Traders said they expected the shilling to trade in the 1,340-1,350 range in the next week. "The likelihood of the shilling weakening is very limited," said Yono Mtengule, an economist at National Bank of Commerce.
UGANDA Traders predicted Uganda's shilling would weaken, undermined by a general pick up in dollar demand from corporate customers. The commercial banks quoted the local currency at 1,982/1,987 per dollar compared with 1,960/1,965 a week ago. Traders said it would trade in the 1,975-2,000 range in coming days.
"If this trend continues, we will see it hitting the 2,000 resistance level in the week ahead," said Faisal Bukenya, head of market making at Barclays Bank Uganda. "We had expected a correction at 1,800 ... but demand keeps piling up." Traders attributed the projected pressure to dollar demand from companies preparing to send out dividends.