This archive report was first published on 21 December 2019.
Published on December 21, 2019, traders predicted that the Kenyan shilling and Zambia's kwacha would strengthen against the dollar in the next week, while Tanzania's shilling would hold steady.
The Kenyan shilling was expected to strengthen due to increased inflows from diaspora remittances ahead of the holiday season amid tightening liquidity in the local money market. Commercial banks quoted the shilling at 100.65/85 per dollar, compared with 101.50/70 at last Thursday's close.
“We could see a stronger shilling as companies close down for the festive season... because of tighter market liquidity,” said a senior trader at a commercial bank.
The Ugandan shilling was also expected to firm on the back of slumping importer demand and removal of excess liquidity from the money markets. Commercial banks quoted the shilling at 3,659/3,669, compared with last Thursday's close of 3,665/3,675.
“Importing activity is slowing down,” said a trader at a leading commercial bank, adding that most of the merchandise needed for holiday shoppers had already been shipped in.
On Thursday, the central bank removed an unspecified amount of liquidity from the money markets via a seven-day repo, which would also support the shilling.
Tanzania's shilling was expected to hold steady due to a slowdown in activity. Commercial banks quoted the shilling at 2,293/2,303 against the dollar, the same levels as last Thursday's close.
The kwacha was expected to firm against the dollar as commercial banks started implementing a central bank directive of increasing the statutory reserve ratio to 9 per cent from 5 per cent, starting on December 23. Commercial banks quoted the currency of Africa's second-largest copper producer at 14.4240 per dollar.
“The kwacha is likely to gain as we approach the implementation date for the Bank of Zambia directive on the statutory reserve ratio,” said independent financial analyst Maambo Hamaundu.
