THE Kenyan shilling’s slide is set to continue as the dollar strengthens on global risk aversion, while Uganda’s shilling is likely to be weighed down by slowing economic growth.Kenya’s shilling is seen under pressure in the coming days as jittery importers rush to buy dollars, denting the central bank’s efforts to support the local currency.The shilling hit an intraday low of 87.80, last seen on Jan. 12, before rallying as much as 2.8 percent when the bank intervened to sell an unspecified amount of dollars and mop up liquidity.Commercial banks quoted the shilling at 86.00/20 at the market close compared with 86.70/90 late on Wednesday.Traders said the shilling was likely to weaken due to reduced inflows into the market as government debt yields fall, liquidity jumps and the greenback gains globally.“We still feel that market sentiment is extremely bearish on the local unit,” said Bank of Africa in a daily report.“Until this changes either through aggressive central bank intervention or rising yields on government papers the shilling will remain under immense pressure.”nterest rates at the short-end of the debt curve edged into single digits for the first time since September this week, weakening the return for offshore investors.The central bank had been expected to cut interest rates at its monetary policy meeting next week after a bigger than expected fall in inflation in May. However, a further ratcheting up of the pressure on frontier market currencies, which has marked the past few days’ trading, could make it harder for policymakers to move.Uganda’s shilling is seen retreating against the dollar, with slowing inflation and weaker economic growth likely to push the central bank to resume interest rate cuts as soon as Friday.Data released by the Uganda Bureau of Statistics (UBOS) on Thursday showed inflation in east Africa’s third-largest economy slowed in May to 18.6 percent, down from a revised 20.0 percent.UBOS also said Uganda’s GDP growth was estimated to have slowed this financial year (ending June 30) to 3.2 percent, down from 6.7 percent.At 1119 GMT commercial banks in Kampala quoted the currency of east Africa’s third largest economy at 2,480/2,490, stronger than last Thursday’s 2,490/2,500 percent.
