NAIROBI, June 6 (Reuters) - The Kenyan and Tanzanian shillings are expected to strengthen next week, while the Ugandan shilling should hold steady.
The Kenyan shilling is seen strengthening against the dollar next week due to weak dollar demand from oil importers, with foreign exchange reserves at the central bank still ample, traders said.
Commercial banks quoted the shilling at 101.30/50 per dollar, the same as last Thursday’s close.
“The level of reserves indicates the central bank of Kenya has the necessary muscle to intervene in case of increased volatility,” a senior trader from one commercial bank told Reuters.
In March, the central bank of Kenya said its foreign exchange reserves were at an all-time high of $10.06 billion, or 6.4 months of import cover, thanks to a $2.1 billion Eurobond the government sold earlier that month.
The Tanzanian shilling is expected to hold steady next week with a high possibility of appreciation due to dollar inflows from the mining, agriculture and tourism sectors, traders said.
The shilling was stable on Thursday at 2,293/2,303, underpinned by low dollar demand as companies met their month-end obligations.
“We expect to see the shilling remain stable next week with a high possibility of appreciating to 2,290/2,300 levels, as corporate clients will be returning to the market after holidays and (on) inflows from mining, agriculture and tourism,” a senior forex trader from a Dar es Salaam commercial bank told Reuters.
The Ugandan shilling is seen trading rangebound ahead of a budget reading for the 2019/2020 fiscal year, with most players keeping to the sidelines until the new budget is unveiled.
At 0946 GMT commercial banks quoted the shilling at 3,762/3,772 compared to last Thursday’s close at 3,755/3,765.
A trader at a commercial bank in the capital Kampala said the shilling would trade in a 3,750-3,780 range in the period before a budget reading scheduled for June 13.
“There’s some uncertainly regarding what might come out in the budget, so I think we’ll see demand remain flat until after (that),” the trader said. (Reporting by John Ndiso in Nairobi, Elias Biryabarema in Kampala and Nuzulack Dausen in Dar es Salaam; Compiled by Clement Uwiringiyimana; Editing by Jan Harvey)