Ugandan, Kenyan and Tanzanian currencies are expected to remain strong against the dollar this week, attributed to inflows from offshore investors and their respective central banks’ interventions to smooth out volatility amid uncertainties over the scheduled repeat presidential election in Kenya.
Data shows that the Tanzanian shilling will remain stable over this week, boosted by end-of-month hard-currency inflows from the mining sector and foreign investors.
The Tanzania shilling was quoted by commercial banks at Tsh2,240/50 to the dollar, which was unchanged from a week ago.
Traders said the shilling was kept strong by dollar sales from mining companies and corporates who were looking for the local currency to pay taxes and salaries at the end of the month.
In Uganda, the shilling is expected to strengthen this week, amid weak demand and inflows from offshore investors. Commercial banks quoted it at Ush3,595/3,605 to the dollar.
The Bank of Uganda is due to sell three- and 10-year Treasury bonds early next month.
In Kenya, Central Bank Governor Patrick Njoroge said the foreign exchange market was relatively stable, supported by resilient tea and horticultural exports, strong recovery in tourism, and diaspora remittances.
Money sent in by Kenyans abroad rose by 5.35 per cent to Ksh107.45 billion ($11.1 billion) in the seven months to July, compared with the same period last year.
Dr Njoroge said that to keep the Kenyan shilling stable over the election period the CBK bought foreign currency.
Efforts to maintain stability of the shilling led to the Central Bank using forex reserves of an equivalent to 4.93 months of import cover — close to the minimum four-month cover recommended by law.
“We are holding import cover that is adequate for the shocks that are anticipated coming with the elections. We have had to purchase some foreign currency to minimise the speed at which the shilling was appreciating,” said Dr Njoroge.