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WEEKAHEAD-AFRICA-FX-Zambian kwacha seen firming, Kenya and Uganda currencies weakening - REUTERS

JULY 03, 2022





LUSAKA, June 2 (Reuters) - Zambia's currency is expected to firm going into next week as Kenya and Uganda's weaken. Tanzania's currency is likely to hold steady.

ZAMBIA

The kwacha ZMW= is likely hold firm against the dollar next week due to increasing hard currency supply from corporates buying the local currency to pay taxes.

On Thursday, the currency of Africa's second-largest copper producer was trading at 17.1400 per dollar from 17.1700 at the close of business a week ago, Refinitiv data showed.

"Improved hard currency inflows, especially from companies preparing for Pay As You Earn tax due on Friday next week should help the kwacha," a commercial bank trader said.

KENYA

Kenya's shilling KES= is expected to weaken due to increased demand for the dollar from general merchant importers.

Commercial banks quoted the shilling at 116.65/85 per dollar, compared with last Thursday's close of 116.60/80.

On Tuesday, the shilling touched a new all-time low of 116.80/117.00, according to Refinitiv data.

"It (the shilling) will remain on the backfoot for now. From general merchants, the demand (for the dollar) is still high," a trader at one commercial bank said.

UGANDA

The Ugandan shilling UGX= is seen weakening, albeit at a slower pace, over the next few days as a central bank policy move satisfies a recent surge in appetite for hard currency.

At 1140 GMT, commercial banks quoted the shilling at 3,740/3,750, compared to last Thursday's close of 3,690/3,700.

"I think the rate hike will only slow the (shilling) depreciation ... the momentum will remain on the weakening side," said a trader at one commercial bank, referring to the central bank rate decision.

On Thursday the central Bank of Uganda raised its benchmark rate by 100 basis points to 7.5%, aiming to counter a surge in inflationary pressures and lend support to the local unit.

The shilling has weakened sharply in recent weeks, undercut by strong demand for dollars from importers and portfolio investors.

TANZANIA

Tanzania's shilling TZS= is expected to hold steady next week due to strong support of inflows from investors.

Commercial banks quoted the local unit at 2,324/2,334 against the dollar on Thursday, compared to 2,322/2,332 at last Thursday's close.

"With the expectation of the inflation rate to remain stable, we believe the shilling will remain around an average of 2,327 in the coming week," said Kristine Van Helsdingen, a trader at AZA Finance.

(Reporting by Chris Mfula, George Obulutsa, Elias Biryabarema and Nuzulack Dausen; Compiled by Chris Mfula; Editing by Maju Samuel)

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