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East Africa: EA Currencies to Have Mixed Trade
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The Citizen (Dar es Salaam)
7 August 2008
Posted to the web 7 August 2008
The Tanzania shilling is expected to have mixed trade in the coming week, with some dealers expecting it to strengthen slightly, while others see it holding steady.
Kenya's shilling is expected to hold steady against the dollar in the coming week, while the Ugandan currency is expected to firm, dealers in the two markets told Reuters yesterday.
"Despite implementation of economic reforms from the 1990s the local currency is still weak against the greenback.
"However, over the last 18 months the Bank of Tanzania has done a good job in sticking to monetary policies that control money supply, which has resulted to having a strong shilling," National Bank of Commerce treasury expert Lawrence Mafuru told The Citizen in an interview.
Commercial banks in the country quoted the shilling at Sh1,152/1,157 to the dollar yesterday, compared with last Wednesday's close of Sh1,157/1,165.
Dealers said they saw the shilling gaining further ground in the coming days as Tanzanian investors prepare to buy shares in National Microfinance Bank, which go on sale on Aug 18.
The government is offloading a 21 per cent stake of the bank worth 63 billion shillings to the Tanzanian public in an initial public offering.
"Going forward for this month (we see) Tanzania shilling strengthening (from) the NMB IPO, which is likely to drain shillings from the market," said Mr Ivan Tarimo, a dealer at Standard Chartered Bank Tanzania.
Other dealers said they expect the local unit to hold steady in the coming week, with little activity expected in the market.
"The shilling remained under pressure to depreciate on Tuesday driven by strong foreign currency demand that came through in the mid morning session.
The market opened in the range of Sh1155/1160 but briefly traded at Sh1158/1163 before it later settled at Sh1156/1161 levels," Barclay Bank Tanzania said in a market report.
The Kenya shilling is expected to hold steady against the dollar in the coming week after strengthening during the review week, dealers said.
At 0845 GMT, commercial banks posted the unit at KSh66.35/45 compared with last Wednesday's close of KSh67.35/45.
Dealers forecast the shilling to trade in the KSh66.50-67.50 range in the coming week.
"For now, we will just limp along at these levels," said Co-operative Bank dealer Peter Mutuku. "But towards the end of the year, I think we will see the shilling finishing strong."
The Uganda shilling is expected to firm against the dollar in the coming week, maintaining this week's rally.
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Leading commercial banks in Kampala posted the local unit at USh1,600/1,610 to the dollar compared with last Wednesday's close of USh1,638/1,643.
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