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Kenyan shilling expected to weaken

NEWS
By Reuters | May 24th 2019

The Kenyan shilling is expected to weaken on the back of end-of-the-month dollar demand while the Zambian kwacha’s bullish run is set to continue.

KENYA

The Kenyan shilling is seen under pressure against the dollar in the coming week as merchandise and fuel importers buy dollars to meet their end-of-month obligations, traders said.

On Thursday commercial banks quoted the shilling at 101.20/40 per dollar, compared with 101.05/25 at last Thursday’s close.

“There is a pickup in demand (for dollars) as we approach the end of month,” said a senior trader from one commercial bank.

TANZANIA

The Tanzanian shilling is expected to strengthen due to anticipated inflows of dollars from exports of agricultural commodities, especially cotton.

On Thursday commercial banks in Dar es Salaam quoted the shilling at 2,295/2,305 against the U.S. dollar, broadly unchanged from last Thursday.

“We expect the shilling to appreciate... due to the anticipated cotton inflows as the season begins next week. If the cotton season goes well as expected the shilling will appreciate even further for a while,” said a forex trader in Dar es Salaam.

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UGANDA

The Ugandan shilling is seen weakening over the next few days, helped by hard currency demand from firms looking to pay for shipments of raw materials for next month.

At 0956 GMT on Thursday commercial banks quoted the shilling at 3,755/3,765, compared to last Thursday’s close of 3,753/3,763.

A trader at a leading commercial bank said they expected rising dollar demand from manufacturing companies toward the end of the month to pay for next month’s supply of raw materials.

“I see the shilling trading under some moderate pressure because of this demand,” he said.

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ZAMBIA

The kwacha is expected to continue to rebound against the dollar as market players view its recent depreciation as overdone.

On Thursday commercial banks quoted the currency of Africa’s second-largest copper producer at 13.1000 per dollar, up from a close of 13.5950 a week ago.

“The depreciation of the kwacha seems to have been exaggerated and mainly driven by sentiment. There now appears to be a self-correction,” one senior commercial bank trader said.

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