Kenya, Uganda shillings to weaken, Zambia kwacha to hold steady – ZAWYA
The Kenyan shilling is expected stay on the back foot
DAR ES SALAAM – Kenyan and Ugandan shillings are expected to weaken against the dollar in the next week to Thursday, while Tanzania's shilling and Zambia's kwacha will be stable, traders said.
KENYA
The Kenyan shilling is expected stay on the back foot, with inflows remaining subdued as exporters await the results of general elections due on Aug. 9.
Commercial banks quoted the shilling at 119.10/30 per dollar, compared with last Thursday's close of 118.70/90. The shilling's present level is an all-time low, according to Refinitiv data.
"On the demand side the oil sector and general merchants are rushing in to buy dollars before we break off for elections," one trader said.
"If everything goes well, we could see some flows coming in and demand reducing, which could help the shilling. If it doesn't then the shilling will remain weaker."
The vote could ramp up political risk, since two of the last three presidential votes have erupted in deadly violence.
UGANDA
The Ugandan shilling is forecast to weaken as strong demand for dollars from offshore investors, manufacturers and energy importers offsets scant inflows.
Commercial banks quoted the shilling at 3,875/3,895, compared with last Thursday's close of 3,855/3,865.
"The market is still heavily tilted toward depreciation I think, because appetite for hard currency remains strong while inflows are struggling to match," said an independent foreign exchange trader in the capital Kampala.
The local currency is 9.4% weaker against the dollar so far this year, according to Refinitiv data.
ZAMBIA
The kwacha will likely hold steady, supported by positive sentiment after official creditors agreed to restructure Zambia’s debt.
On Thursday, commercial banks quoted the currency of Africa’s second-largest copper producer at 16.2300 per dollar versus a close of 16.3750 a week ago. “News of Zambia getting closer to an IMF deal is good for the kwacha,” one commercial bank trader said.
Zambia's creditors pledged to negotiate a restructuring of the country's debts on Saturday, a move IMF Managing Director Kristalina Georgieva welcomed as clearing the way for a $1.4 billion Fund programme.
TANZANIA
Tanzania’s shilling is expected to hold steady, with inflows from foreign direct investment matching demand for dollars from the manufacturing and energy sectors.
Commercial banks quoted the shilling at 2,327/2,337 on Thursday, the same as last Thursday's close.
“We expect the shilling to remain steady … supported by inflows from foreign direct investment and other sources,” Kristine Van Helsdingen, a forex dealer at AZA Finance, a Nairobi-based foreign currency trading firm, said.
(Reporting by Nuzulack Dausen, Elias Biryabarema, Hereward Holland and Chris Mfula; Compiled by George Obulutsa; Editing by David Holmes)
