Economy

Kenyan shilling under pressure, traders watch central bank

Date: Nov 20, 2014

Kenya's shilling was hovering around three-year lows on Thursday on the back of corporate demand for dollars but companies were acting cautiously as the currency was at levels where the central bank intervened last week.

By 0735, the shilling quoted at 90.15/35, little changed from Wednesday's close of 90.15/25.   

When the Central Bank of Kenya (CBK) sold dollars last week, the shilling strengthened to below the 90-mark before weakening again this week.   

Traders said dollar demand was mainly coming from energy firms and telecommunications, as well as importers.    

"We have been expecting the shilling to weaken. The only reason the shilling had strengthened was because of dollar selling by the CBK on Friday," said Nahashon Mungai at Kenya Commercial Bank. "We had just seen a correction of that move."   

"The only thing that is slowing the move is that constant apprehension in the market that the CBK might intervene."   

The shilling has been under pressure this year mainly due toa slump in revenues from tourism, a major hard currency earner that has been hit by a spate of militant attacks. Recently, the dollar has also strengthened against several currencies.   

Traders said the shilling could stay around 90.20/40 and might find support from the central bank before it hit or moved below 90.50.  

 The central bank has not set any exchange rate level and does not generally comment on any intervention, but it has said it has enough reserves to cushion the foreign exchange market against shocks

--reuters--

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