WEEKAHEAD-AFRICA-FX-Zambian currency to eke out gains, Tanzania’s shilling seen softer

LUSAKA, Oct 8 (Reuters)Zambia’s currency is next week expected to trade slightly firmer against the U.S. dollar, while Tanzania’s currency is seen softening while those in Kenya and Uganda hold steady.


The kwacha ZMW= will likely make small gains against the dollar next week, supported by hard currency sales by companies preparing to settle tax accounts.

On Thursday, commercial banks quoted the currency of Africa’s second largest copper producer at 20.1000 per dollar compared to a close of 19.9800 per dollar a week ago.

“It should get some temporary relief because of VAT (Value Added Tax) payments that companies will be making next week,” one financial analyst said.


Tanzania’s shilling TZS= is expected to face pressure next week from uncertainty ahead of national elections on Oct. 28.

Commercial banks quoted the shilling at an average of 2,313/2,327 on Thursday, around the same levels as last week.

“We foresee weakening pressure returning as political risk ahead of elections on Oct. 28 drives speculators to bet against the currency,” said Terry Karanja, a treasury associate at Nairobi-based FX trading firm AZA, in a note.


The Kenyan shilling KES= is expected to trade in a narrow range next week, with commercial banks watching to see if the central bank will sell dollars to soak up demand pressure.

Commercial banks quoted the shilling at 108.50/70, compared to last Thursday’s close of 108.40/60.

“I think the key determinant is how much the central bank sells to support the unit,” said a trader at one of the commercial banks in the capital Nairobi.

“If they were, for example, to stay out, then you may be begin to see a bit of panic coming in and the currency weakening a bit.”


The Ugandan shilling UGX= is seen trading flat, as some firms reserve local currency holdings to meet mid-month tax payments.

At 0930 GMT commercial banks quoted the shilling at 3,700/3,710, compared to last Thursday’s close of 3,710/3,720.

“Demand will remain broadly subdued in the coming days ahead of corporates clearing their tax obligations mid-month,” said a trader at a leading commercial bank.

(Reporting by Chris Mfula and Elias Biryabarema; Compiled by Chris Mfula; Editing by Mfuneko Toyana and Barbara Lewis)

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