African currencies forecast next week may 28 2012

forex trading outlook today - African currencies forecast next week may 28 2012 : Most frontier African currencies are expected to come under pressure next week as foreign investors sell domestic bond holdings and repatriate funds.

KENYA:
The Kenyan shilling is seen under pressure due to yields on government securities tumbling into single digits and importers buying dollars on fears that the local currency will depreciate further.

Falling government bond yields and a global rush into the dollar stoked by fears of a possible Greek exit from the euro have hammered the shilling in recent days, sending it into negative territory against the dollar so far this year.

Commercial banks quoted the shilling at 85.25/45 per dollar, a four-month low reached on January 27, and 0.2 percent weaker than last Thursday's close of 84.25/45.

Technical charts showed shilling support at 85.80, and traders said all eyes were on developments in the euro zone.

The central bank has been active selling unspecified amounts of dollars to commercial banks and soaking up liquidity to support the shilling, and will continue to do so into next week, traders said.

UGANDA:
The Ugandan shilling is expected to remain under strain, undermined by importer demand for dollars and increased risk aversion to emerging market currencies due to concerns over the euro zone debt crisis.

Manufacturers usually place large dollar orders towards the end of the month as they prepare to pay for raw material imports to stock up for the following month, putting the local currency under pressure.

Commercial banks in Kampala quoted the currency of Africa's largest coffee exporter at 2,485/2,495, a touch weaker than last Thursday's close of 2,470/2,480.

"The euro zone will continue to pose pressure to weak currencies like the shilling," said Faisal Bukenya, head of market making at Barclays Bank Uganda.

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