Tanzania shilling to hold steady next week on inflows from agricultural sector

Tanzania’s shilling is expected to hold steady next week with great support for inflows from agricultural exports.

Commercial banks quoted the shilling at 2,327/2,337 on Thursday, unchanged from last week’s close.

“Agri-commodity sales including cashew nuts and NGO inflows have helped keep the shilling stable in recent weeks, and with the country managing to keep annual inflation relatively low at 4.9% in October, we expect the shilling to continue holding firm against the dollar in the week ahead,” Kristine Van Helsdingen, a dealer at Nairobi-based FX trading firm AZA Finance, said.

On the other hand, Kenya’s shilling is expected to weaken due to dollar demand in the market from the energy sector, which is expected to persist till the end of the month.

The shilling was trading at 122.0/122.20 on Thursday, compared with 121.70/90 at the close of last Thursday’s session.

The shilling has come under pressure due to dollar demand from manufacturing and energy sectors this week, having hit several fresh lows. It is down nearly 7.3% against the dollar this year.

“We expect the shilling to remain on the weaker foot going into next week,” said one trader at a commercial bank.

The Ugandan shilling is expected to trade with an appreciation bias in the coming days with some inflows expected from large credit lines the government is acquiring to bolster its finances.

At 0752 GMT, commercial banks quoted the shilling at 3,745/3,755, compared to 3,765/3,775 at last Thursday’s close

Lawmakers have approved a request by the government to allow it to borrow $464 million from Standard Chartered Bank while separately, the finance ministry has invited financial institutions to bid to lend the government 500 million Euros.

“These will be huge amounts of inflows that will potentially keep the shilling on a strengthening trajectory,” said a trader at one commercial bank in the capital Kampala.

SOURCE: REUTERS