The Central Bank of Kenya. Photo/FILE
By DUNCAN MIRIRI, Reuters
In Summary
- The overnight interbank lending rate crept up again to 11.7266 per cent on Thursday.
- Banks posted the shilling at 87.95/88.05, down from Thursday's close of 87.85/95.
The Kenyan shilling edged down on Friday, weighed by
demand for dollars from banks replenishing their dollar positions as a
domestic funding crunch eases.
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At 0800 GMT, commercial banks posted the shilling at 87.95/88.05, down from Thursday's close of 87.85/95.
"As money markets loosen up, people are squeezing out dollar shorts," said a trader with a leading commercial bank.
Banks had sold off their dollars
to fund their shilling positions in the last few sessions after
short-term lending rates jumped.
Overnight borrowing rates on the
interbank market shot up over the last two weeks after the government
delayed the release of funds to departments and local authorities. The
central bank has been injecting funds into the market through reverse
repos since Tuesday, helping to alleviate the crunch.
The overnight rate crept up again to 11.7266 per cent on Thursday.
But volumes dropped to just over
Sh7 billion, suggesting the reverse repos were having an effect and,
with Sh15 billion of government securities also due to mature on Monday,
interbank rates were on track to fall.
Market participants said the
shilling was likely to remain under pressure although the central bank
could sell dollars to prevent it from slipping through 88.00.
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