May 9, 2019 / 12:10 PM / 2 months ago

WEEKAHEAD-AFRICA-FX - Kenya's shilling to strengthen, Uganda's to weaken

NAIROBI, May 9 (Reuters) - Kenya’s shilling is forecast to strengthen against the dollar in the next week to Thursday, while Uganda’s shilling will weaken, traders said.

KENYA

The Kenyan shilling is expected to firm up, traders said, helped by tightening liquidity in the money markets and inflows from offshore investors buying government debt.

Commercial banks quoted the shilling at 101.00/20 per dollar, compared with 101.10/30 at last Thursday’s close.

“The liquidity crunch might continue, and the shilling might continue to strengthen based on most banks’ positions,” said a trader from one commercial bank.

UGANDA

The Ugandan shilling is forecast to weaken on the back of increased dollar demand from importers and commercial banks.

Commercial banks quoted the shilling at 3,775/3,785, compared with last Thursday’s close of 3,755/3,765.

Benon Okwenje, a trader at Stanbic Bank, said they expected the shilling would remain on the weaker side since a recent surge in demand for hard currency is likely to be sustained.

He didn’t indicate which players were exerting most demand but typically much of the appetite for dollars in Uganda comes from fuel importers, telecoms firms and manufacturers.

TANZANIA

The Tanzanian shilling is expected to gain next week due to the increase in dollar inflows from the mining and agriculture sectors.

Commercial banks quoted the shilling at 2,298/2,310 compared with last Thursday’s close of levels from 2,305/2,315.

“We anticipate that the shilling will gain further next week to the levels of 2,292/2,302. This appreciation will be highly contributed to by mining and agriculture flows, especially (from) cashew nuts,” a senior trader at one commercial bank said.

ZAMBIA

The kwacha is likely to continue trading at current levels in the coming week, supported by tax payments due on Tuesday.

Commercial banks quoted the currency of Africa’s second-largest copper producer at 12.8400 per dollar, firmer than a year-high of 12.9300 a week ago.

“It is likely to remain range-bound, especially because there are tax payments due next Tuesday,” one senior commercial bank trader said, referring to the kwacha. (Reporting by John Ndiso, Elias Biryabarema, Chris Mfula and Nuzulack Dausen; Compiled by George Obulutsa)

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