The Kenyan and Tanzanian currencies have stabilised in the past five months due to tighter monetary policies, while the General Election in Uganda has forced its currency to depreciate even further.

In the past two months, the Kenyan and Tanzanian shillings have made slight gains against the dollar, buoyed by stronger dollar earnings. The Kenyan shilling has moved from 102.80 units to the dollar at the start of the year to 101.80 units. The shilling has so far lost 0.02 per cent to the dollar this year.

“We have seen some slight gains attributed to export earnings, notably from tea and horticulture. We have also seen good dollar inflows for non-governmental organisations. On the other hand, the market has recorded limited demand for the dollar,” said Wilson Kibe, a treasury dealer in Nairobi.

Mid last week, Kenya’s Central Bank injected $39.33 million into the money market using reverse repurchase agreements to aid struggling lenders who were having difficulties in getting liquidity from other commercial banks on the interbank market.

“The shilling has a stronger outlook and we expect it to go below the 100 unit mark in the next few months. The lower import bill due to low oil prices is working in its favour,” said Mr Kibe.

Last month, Central Bank Governor Patrick Njoroge said the shilling has been stable over the past three months due to market discipline instilled by the regulator.

“Previously, the banks were not following market discipline procedures, which was leading to a lot of instability. There was also hype from people who were pushing the rates up. We can now confidently say that we are closer to the fundamentals. Going forward, the prospects look better,” said Dr Njoroge.

Kelvin Tuitoek, a macroeconomic analyst at Genghis Capital, said the shilling’s stability against the dollar has been supported by relativity lower levels of volatility over the end-of-year period, with corporate demand remaining low and businesses closing their books.

“This did lend some stability to the dollar. However, I anticipate that the cyclical end month pressures and resumption of business will spur further pressures on the dollar. Some inflows based on the uptake of tourism and modest inflows from exports have lent some support and buffered the currency reserves,” said Mr Tuitoek.

The Tanzanian shilling has had a mixed showing, recording gains against the dollar in January, before depreciating with economists from Bank of Tanzania (BoT) expressing optimism about its performance.

The Tanzanian shilling depreciated by 25 per cent last year. At the start of the year it was at 2,159 units to the dollar, before it gained to 2,144 units, but is currently exchanging at 2,188 units. It has so far shed three per cent this year.

While the central bank expects continued stability, other economists say the local currency will continue depreciating but this time at a slower pace compared with the battering experienced in 2015.

KCB Bank Tanzania head of treasury Godfrey Ndalahwa said the Tanzanian shilling will depreciate by 12 per cent this year.

“With the dollar rally now mostly spent, we expect the pressures on the shilling to ease and hence a slower depreciation of the Tanzanian shilling in the coming months,” said Mr Ndahalwa.

BoT’s director of economic research and policy Johnson Nyella is optimistic that the shilling will hold at its current trading levels.

“We are happy with the continued stability of the shilling considering that the depreciation experienced last year is easing,” said Mr Nyella.

The Ugandan election has seen the country’s currency shed five per cent in the past two months as investors adopt a cautious stance. The Ugandan unit is currently trading at 3,425 units to the dollar, having lost 0.15 per cent on the election day alone. The currency was trading at 3,372 at the start of the year. The Uganda shilling depreciated 17.5 per cent against the dollar in 2015.

David Bagambe, a dealer at Diamond Trust Bank Uganda, said election jitters had seen trader’s cover their dollar positions.

“Political uncertainty has resulted in jitters in the market. This has made banks and other players cover their short positions, resulting in further weakening of the shilling,” said Mr Bagambe.

The effects of Rwanda’s poor export earnings and a stronger dollar last year are expected to spill over into 2016.

The Rwandan franc shed 7.6 per cent to the dollar last year, less than its regional counterparts, due to an increase in market intervention by the Rwanda National Bank (BNR) that saw $273.5 million in repo sales. The Rwandan franc is currently trading at 745.60 units to the dollar, up from the 747.98 units to the dollar at the start of the year.