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Kenyan, Ugandan shilling seen firm, Tanzania weaker

Discussion in 'Biashara, Uchumi na Ujasiriamali' started by Invisible, Dec 17, 2008.

  1. Invisible

    Invisible Admin Staff Member

    Dec 17, 2008
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    NAIROBI, Dec 17 (Reuters) -
    (Reporting by George Obulutsa in Nairobi and Susan Nabadda in Kampala; Editing by David Clarke)
  2. M

    Mwanjelwa JF-Expert Member

    Dec 17, 2008
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    Does it mean oil companies in Kenya and Uganda import in their local currencies? Probably they have enough reserve? Any economist to enlighten?
  3. M

    MgonjwaUkimwi JF-Expert Member

    Dec 18, 2008
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    Kenya and Uganda, like Tanzania, import oil using international currencies like US$ and the like. In Kenya, kenyan shilling is projected to be firm not because Kenyan oil importing companies import oil using Kenyan shilling. It is because ""Most corporates have already done away with their commitments and because most of them normally close for Christmas ... dollar demand has been suppressed," said Jeremiah Kendagor, head of foreign Exchange at Kenya Commercial Bank[/I]." Put it differently, foreign exchange trading is temporarily defunct due to holiday season.

    In Uganda, the demand of US$ is projected to be low because non-governmental organisations and Ugandans living abroad increase the demand for Ugandan shilling during holiday season.

    In Tanzania the situation is different. Demand for US$ is projected to increase as oil importing companies want to import more.

    Tanzanian oil importing companies could be acting on speculation that international oil prices will go up in the near future and therefore decide to import more before price increase (as a matter of fact a recent reduction on oil supply support such speculation). Kenyan and Ugandan oil importing companies may be speculated the opposite, or may be other factors such ending year comittment (in Kenya), or inflow of US$ (in Uganda) outwheigh a small oil-driven increase of demand for US$.
  4. Lole Gwakisa

    Lole Gwakisa JF-Expert Member

    Dec 18, 2008
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    Thanks invisible and Mgonjwa wa ukimwi for the enlightening posts.
    How ever the downward trend of the Tanzanian shilling is worrying and I hope the BOT will ease this pressure to make imports affordable.
  5. M

    MgonjwaUkimwi JF-Expert Member

    Dec 18, 2008
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    Under the current global economic crisis there isn't much BoT can do. Under normal circumstance you would expect BoT to dish out US$ in an attempt to reduce the demand for US$; this is impractical given the on-going world economic crisis as poor countries need foreign currencies more than ever.

    Our hope is for the government to perhaps, though against the principles of free market economy, to discourge importation and consumption of goods and services that are also locally produced along with discouraging dolarization of the Tz economy. Consumption of locally produced goods and services reduces (or at least stabilizes) the demand for US$ and hence appreciates local currency.