Kenyan shilling firms on tight liq­uid­ity, gains seen short-lived

The Financial Daily - - INTERNATIONAL -

NAIROBI: The Kenyan shilling firmed on Wed­nes­day helped by tight liq­uid­ity in the money

mar­kets but traders said the lo­cal cur­rency was ex­pected to stay un­der pres­sure due to end-month im­porter de­mand for dol­lars.

At 0745 GMT, com­mer­cial banks quoted the shilling at 91.50/60 to the dol­lar, com­pared with Tues­day's close of 91.60/70.

Traders said the shilling was re­ceiv­ing sup­port from a short­age of the lo­cal cur­rency af­ter in­vestors bought Trea­sury bills and bonds worth a to­tal 26.6 bil­lion shillings ($290.9 mil­lion) last week.

Tight shilling liq­uid­ity makes it more ex­pen­sive to hold long dol­lar po­si­tions, which partly sup­ports the shilling.

Due to the liq­uid­ity squeeze, the weighted av­er­age in­ter­bank lend­ing rate rose to 8.0814 per­cent on Tues­day from 7.7290 per­cent on Mon­day.

"The mar­kets are very tight. We have seen overnight rates jump up. That's what is keep­ing the shilling well sup­ported," a se­nior trader at one com­mer­cial bank said.

How­ever, traders said the shilling's strength­en­ing was tem­po­rary and that it would start eas­ing once liq­uid­ity im­proved as there was still sig­nif­i­cant im­porter dol­lar de­mand.

"The fun­da­men­tals on the ground still point to­wards strong de­mand side and a sub­dued sup­ply side," Bank of Africa said in its daily mar­ket re­port.

The shilling - which has lost 1 per­cent against the dol­lar so far this year - is fore­cast to trade in the 91.40 to 92.00 range in the days ahead, traders said. -Reuters

Newspapers in English

Newspapers from Pakistan

© PressReader. All rights reserved.