AFRICA FX WEEKAHEAD-Tanzanian and Kenyan shilling seen falling

NAIROBI Thu Feb 14, 2013 9:38am EST

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NAIROBI Feb 14 (Reuters) - The Tanzanian shilling is seen weaker on oil sector demand for dollars while the Kenyan shilling looks set to be pressured by tight liquidity The Nigerian and Ugandan currencies are seen rising on strong dollar inflows.

TANZANIA

Tanzania's shilling is seen under pressure in the coming days, weighed down by strong demand from oil importers and declining dollar inflows, traders said.

Traders in Tanzania's commercial capital Dar es Salaam quoted the shilling at 1,611/1,621 to the dollar on Thursday, stronger than 1,620/1,630 a week ago.

"The shilling is expected to remain under pressure from the oil sector and other importers next week, because we are seeing very little inflows of dollars into the market," said Theopistar Mnale, a trader at Tanzania Investment Bank.

Market participants said the shilling was likely to trade in the 1,610-1,620 range in the days ahead.

"Let's hope the central bank will continue to intervene in the market and stop the shilling from further depreciation. But we don't expect the shilling to go below 1,600 levels even if the central bank intervenes aggressively through increased dollar sales and tighter monetary policy controls."

KENYA

The Kenyan shilling is seen coming under pressure in days ahead as the squeeze on liquidity, that has been supporting the currency, loosens due to government debt redemptions.

The shilling slipped for the first time in seven sessions to 87.30/50 against the dollar on Thursday, but was still stronger than last Thursday's close of 87.55/75.

"We're expecting some bond maturities next week that will ease liquidity a bit and weight on the shilling," said Pally Muchiri, a senior trader at Co-operative Bank.

The central bank has been draining shillings from the market on a daily basis and sold dollars in seven separate sessions this year, in a bid to support the local currency.

NIGERIA

Nigeria's naira firmed on Thursday to its strongest since Jan. 28, after dollar flows from offshore investors buying local debt boosted liquidity, and was seen stable at this level next week on fresh dollar flows from offshore.

The naira was trading at 157.25 to the dollar on the interbank market at 1035 GMT, firmer than the 157.45 it closed the market on Wednesday. It was last seen at this level on Jan. 28, when it closed at 157.15 to the dollar.

"There were some dollar inflows from offshore investors buying local debt at an auction on Wednesday, which help buoyed dollar liquidity and provided support for the naira," one dealer said.

Nigeria sold 105 billion naira ($667.22 million) worth of sovereign bonds maturing in 2017, 2019, 2022 and 2030 on Wednesday, with strong demand from offshore investors and pension funds pushing yields lower. [ID: nL5N0BE85I]

UGANDA

Uganda's shilling is seen firming against the dollar in coming days as upcoming elections in neighbouring Kenya dampen importers' dollar demand on fears of delays to imports.

The March presidential vote in Kenya is the first since a disputed election in 2007 which unleashed nationwide violence, blocking major trading routes of landlocked countries including Uganda and Rwanda which depend on Kenya's Mombasa port.

At 0910 GMT, commercial banks posted the shilling at 2,635/2,645 to the dollar, stronger that last Thursday's close of 2.650/2,660.

"(Importers) are cautious of goods being held at the (Kenyan) port," said Robert Aloo, head of trading at Kenya Commercial Bank-Uganda.

Traders said importers had already made purchases of commodities such as fuel, while others were planning to resume business after the Kenyan elections.

Seif Kiwanuka, head of trading at Diamond Trust Bank said interest rates were seen raising after the government said on Wednesday it wanted to increase domestic borrowing by 0.7 percent of GDP this fiscal year, signalling offshore appetite in the debt market.

(Reporting by Kevin Mwanza, Oludare Mayowa, Elias Biryabarema and Fumbuka Ng'wanakilala; editing by Ron Askew; Editing by James Macharia)

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