East African currencies remain stable

Currencies of three East African countries - the shillings -- in Tanzania, Uganda and Kenya, are expected to hold firmly against the US dollar the coming days, thanks to buoyant economies.

The Tanzania’s shilling was expected to hold steady against the US dollar in the days due to inflows from proceeds in the agriculture sector while demand for the greenback has subdued.

The Dar es Salaam’s money market analysts also projected that the shilling could strengthen slightly after holding its position in the last one week. According to traders, a US dollar was bought for between 1,617/- and 1,627/- in Tanzania at the end of last week compared to 1,617/- and 1,623/- a week ago.

Standard Chartered Bank said the shilling was forecast to hold steady against the dollar in the next coming days backed by agro-sector inflows and easing demand. 

“The shilling is forecast to hold steady in the days ahead and could strengthen slightly, helped by inflows from the agriculture sector and subdued greenback demand,” Standard Chartered Bank said in a statement.

National Microfinance Bank (NMB) said the shilling remained unchanged for the last two days that ended on Friday despite increasing demand from energy sector. 

“During the day, we saw a slight depreciation of the currency due to increased dollar demand from energy and construction sector,” NMB said adding “but the position corrected itself supported by agriculture flows.”

Bank of Tanzania data shows that while Tanzania shilling depreciated by 1 per cent in the 12 months ending January 2013, the Kenyan shilling depreciated by 4.6 per cent and the Ugandan shilling by 11.7 per cent.

“There has been significant increase in the demand for the dollar among non-typical users,” the BoT Governor, Prof Benno Ndulu, said last month adding that the shilling was relatively still stable. 

However, regional wise, the Ugandan shilling, according to Standard Chartered Bank, was likely to be range-bound over the next week though weakening was not ruled out due to optimistic economic growth.

“But could potentially weaken as buoyant economic growth fuels expectations of a surge in greenback demand,” the bank said. At the weekly close commercial banks quoted the Ugandan currency at 2,595/2,605, from last week’s close of 2,590/2,600.

The local currency is up 3.5 per cent against the dollar in the year to date. Kenya’s shilling was expected to strengthen in coming sessions lifted by foreign investors selling dollars to buy local stocks and fixed income securities.

“The shilling has firmed 0.7 per cent to 84.70/90 in the last three sessions after the Supreme Court upheld Uhuru Kenyatta’s March 4 presidential election win in a largely peaceful vote,” Standard Chartered said.
Source: The Daily News, www.dailynews.co.tz, reported by Abduel Elinaza in Dar es Salaam
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