Bank stock investors seen supporting Kenyan shilling

The Kenyan shilling is expected to firm as offshore investors buy banking stocks after the government lifted a cap on lending rates, boosting dollar supplies.

The Kenyan shilling could strengthen in the coming week, supported by dollar inflows from investors abroad buying bank shares on the stock market, after the government removed a cap on commercial lending rates, traders said.

Commercial banks quoted the shilling at 102.65/85 per dollar, compared with 103.25/45 at last Thursday's close.

"We are having a good source of dollars mostly from the banking stocks on the stock exchange," said a senior trader from one commercial bank.

The kwacha is expected to remain under pressure against the U.S. dollar next week as hard currency supply diminishes against higher demand from the retail sector.

On Thursday, commercial banks quoted the currency of Africa's second-largest copper producer at 13.4700 per dollar, down from 13.2850 a week ago.

"It will still remain under pressure because dollar demand still high," independent financial analyst Maambo Hamaundu said.

is

The Ugandan shilling is likely to strengthen, helped by remittances from Ugandans working abroad and inflows from non-governmental organisations.

At 0952 GMT, commercial banks quoted the shilling at 3,698/3,708, compared with last Thursday's close of 3,710/3,720.

"We are entering that time of the year when we tend to see higher flows from diaspora people who are usually sending money to their relatives for December festivities," said a trader at a leading commercial bank.

He said the shilling will likely trade around 3,680-3,700 over the next few days.