Money Markets
The Shilling was broadly stable on Thursday. PHOTO | FILE
By REUTERS
The Kenyan shilling was broadly stable on Thursday as
improved liquidity in the money markets kept up the pressure,
offsetting the impact of lower demand for dollars by importers.
At 0700 GMT, commercial banks posted the shilling at 103.15/25, barely changed from Wednesday's closing rate of 103.25/35.
"Liquidity is still putting pressure," said a
senior currency trader at a commercial bank, referring to lower
overnight lending rates, which usually make it cheaper for banks to
build up dollar positions.
The weighted average interest rate for overnight
borrowing for banks stood at 17.2604 per cent on Tuesday from 18.1622
per cent the previous day.
Traders said there was lower demand for dollars, as
importers waited to see how far the shilling will strengthen, but the
impact of the sluggish demand was being curbed by easing the liquidity
conditions.
CBK action
Central bank sought to mop up Sh5 billion ($48.50 million) from the market on Thursday saying there was excess liquidity.
The bank normally takes out excess liquidity, to
prevent overnight lending rates from falling too low thus making it
slight cheaper for banks to bet against the shilling, to maintain
stability in the foreign exchange rate.
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