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- Feb 26, 2006
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NAIROBI, Dec 17 (Reuters) -
(Reporting by George Obulutsa in Nairobi and Susan Nabadda in Kampala; Editing by David Clarke)The Kenyan and Ugandan shillings are expected to firm against the dollar in the week to Wednesday, while the Tanzanian currency is forecast to weaken, dealers said.
KENYA
The Kenya shilling (KES=) is forecast to firm further against the dollar in the coming week, helped by low demand for the U.S. currency from corporate clients who are closing for the Christmas break.
At 1220 GMT, commercial banks quoted the local unit at 77.00/20 to the dollar, compared with last Wednesday's close of 78.10/20. The shilling was seen trading in the 76.50-77.50 range against the dollar in coming days.
"Most corporates have already done away with their commitments and because most of them normally close for Christmas ... dollar demand has been suppressed," said Jeremiah Kendagor, head of foreign Exchange at Kenya Commercial Bank.
"There will be more of the same low demand ... I think the shilling will close on a firm note," he said.
The shilling's day-to-day movements are boosted by U.S. currency inflows from sectors like tourism, agriculture and remittances from abroad, while dollar demand from areas like manufacturing and energy weaken the local unit.
TANZANIA
The Tanzania shilling (TZS=), however, was expected to weaken during the week, thanks to increased demand for the U.S. currency from corporate clients, especially oil companies.
Commercial banks quoted the shilling at 1,300/1,310 to the dollar, compared with last Wednesday's close of 1,280/1,290.
Dealers said they expected the shilling to trade in the 1,280-1,310 range against the dollar in coming days.
"There is still big demand from the oil sector and little supply," said Hakim Sheikh, a dealer at Commercial Bank of Africa Tanzania.
"There are no dollars. We buy most of the time from Bank of Tanzania and they intervene with very small amounts."
Dealers said telecoms firms, in addition to oil companies, were also seeking the U.S. currency during the week.
"We have seen some increased demand from mainly telecommunication companies coming to the markets," said Christopher Makombe, head of trading at Standard Chartered Bank Tanzania.
Dealers said there was also offshore demand for the dollar over the past week.
UGANDA
The Uganda shilling (UGX=) is projected to remain firm against the dollar, due to an increase in year-end flows of the U.S. currency and waning demand, dealers said.
Commercial banks in Kampala posted the local unit at 1,955/1,965 to the dollar, compared with last Wednesday's rate of 1,960/1,970.
Dealers said they expected it to trade in the 1,950-1,980 range over the coming days.
"We have seen some year-end inflows coming in from the non-governmental organisations and Ugandans living abroad," said Denis Mushabe Mashanyu, a dealer at Standard Chartered Bank Uganda.
Dealers said the shilling had been resurgent against the dollar in the past few days as demand for the U.S. currency waned ahead of the Christmas holiday season.
The Central Bank offered 65 billion shillings at Wednesday's Treasury bill auction. Last week the Central Bank rejected all bids for the 50 billion shilling two-year treasury bond.