Shilling stable amid mop up of excess cash

The shilling was stable Tuesday as Central Bank of Kenya (CBK) continued to mop up excess liquidity from the market amid heightened dollar demand from importers.

Commercial banks were quoting the shilling at an average of 103.81 in afternoon interbank trading, slightly weaker compared to Monday’s closing average of 103.79 units to the dollar.

The CBK was back in the market to mop up Sh11.65 billion in seven-day repurchase agreements (Repo), out of bids worth Sh15 billion from banks at a rate of 8.96 percent.

On Monday, CBK mopped up Sh56.2 billion through the same instrument in what was seen as a pre-emptive move ahead of a possible large injection of shillings into the market.

Traders also said that it is instructive that the exchange rate remained largely unmoved in the face of such a large liquidity withdrawal.