EAC currencies steady

By Julius Businge

The three East African currencies of Kenaya, Uganda and Tanzania remained steady trading a narrow range throughout the week ending March 23.

“It was a sideways market for most of the trading sessions of the week with no uptrend or downtrend clearly established,” said Stephen Kaboyo a director at Alpha Capital Partners. He said the shilling opened flat at 2630/50 levels on the back of weak demand and remained almost at same levels in the early part of the week.

Standard Chartered Bank’s financial markets team said the market saw sizeable inflows which were equally matched off with the energy sub-sector demand persistent with multinationals covering their dividend requirements as well.

The team said treasuries firmed with the one year paper coming in at 11.75% from the 12.64% in the previous auction which was expected due to excess liquidity in the market.

The Central Bank continued to mop the excess liquidity doing a 30 day deposit auction taking out sh84 billion.

“We expect the Uganda shilling to remain range bound in the 2630-60 bucket with a bias on the weakening due to dividend outflows,” the bank said.

The Kenya shilling traded in the narrow range of 85.50-85 with moderate activity as the market awaits the outcome of an election petition on the president vote sitting with the Supreme Court with allegations of voting irregularities.

The demand for US Dollars from importers remained subdued after heavy buying occurred ahead of the elections early this month.

“We expect the Kenya shilling to weaken further towards 86.00 due the continued political uncertainty in the coming week with the downward movement well supported at 85.50,” the team said.

The Tanzania shilling was unchanged during the week trading in the 1620/30 region with a good two way flow “and we expect that to hold with a muted bias of a weak local unit in the coming weeks with seasonal dividends outflow as a big factor”.

“The expected range is 1615-40,” the team said.