Kenya shilling strengthens after CBK sells dollars

Kenya’s shilling strengthened on Thursday after the central bank sold dollars to banks to stem persistent weakness in the local unit, traders said.

At 12:30pm local time, commercial banks quoted the shilling at Sh103.60/80 per dollar, up from 104.15 when the central bank intervened earlier in the session.

It had slid more than 1 percent in seven straight trading sessions.

The shilling sank to its lowest level against the dollar in nearly five years earlier this week due to heightened political risk, a firmer dollar, concerns about export earnings and excess liquidity in the money markets.

“CBK (Central Bank of Kenya) have come in, they’ve sold dollars,” said a trader at one commercial bank.

The bank also sought to mop up 15 billion shillings from the market through seven-day repos.

The weighted average interest rate on the overnight borrowing market for banks has hovered around 2 percent last month, making it cheaper for banks to bet against the currency by buying up dollars.