Kenya and Tanzania currencies to steady : The Standard

• Reuters 17th Aug 2019 00:00:00 GMT +0300

Kenya’s and Tanzania’s shillings are expected to hold steady against the dollar in the next week to Thursday, as will Zambia’s kwacha, traders said. The Kenyan shilling is expected to be stable, supported by inflows from offshore investors buying government debt and tightening liquidity in the local money market, traders said. Commercial banks quoted the shilling at 103.15/35, compared with 103.00/20 at last Thursday’s close. “Beginning of a new credit reserve ratio cycle and upcoming bonds could offer the shilling some support,” said a trader from one commercial bank.

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The Tanzanian shilling is expected to hold steady, with dollar demand from the energy and manufacturing sectors being matched by inflows from the tourism and agriculture sectors. Commercial banks quoted the shilling at 2,293/2,303, the same level as last Thursday’s close. “The demand is very steady with more coming from the manufacturing, and energy sectors. We see this demand matching the inflows ... with more inflows coming from tourism and agriculture exports especially cotton,” a foreign exchange trader at one commercial bank in Dar es Salaam said. The Ugandan shilling is seen trading stable over the next few days after the central bank’s decision to leave its benchmark lending rate unchanged. Commercial banks quoted the shilling at 3,690/3,700, unchanged from last Thursday’s closing level.

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“After the central bank’s neutral stance, I don’t expect any major moves in the market in terms of position taking,” said a trader at a leading commercial bank. On Thursday the central Bank of Uganda left its benchmark rate unchanged at 10 per cent amid low inflation. The kwacha is next week expected to remain range-bound due to tight liquidity in the money markets. Commercial banks quoted the currency of Africa’s second-largest copper producer at 13.0200 per dollar from a close of 13.0000 a week ago. “The kwacha is likely to continue trading within current levels, with movements being expected on either side depending on demand and supply factors,” Cavmont Bank said in a note.

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