Shilling at one month high on rising Treasury yield

Money Markets

Kenya's shilling was trading at its strongest level in a month early on Thursday. PHOTO | FILE  

By Reuters

In Summary

• "The shilling is getting stronger. This is due to lack of liquidity and rising yields in government securities that is going to attract a lot of offshore investors," said one senior dealer at a commercial bank.

Kenya's shilling was trading at its strongest level in a month early on Thursday, helped by rising yields on government securities and weak corporate demand for dollars.

The shilling was quoted at 104.20/40 to the dollar, compared with Wednesday's close of 104.55/75.

"The shilling is getting stronger. This is due to lack of liquidity and rising yields in government securities that is going to attract a lot of offshore investors," said one senior dealer at a commercial bank.

JUMP

Yields on Kenya's 182-day Treasury bills jumped to 20.695 per cent at Wednesday's auction from 16.301 a week earlier, while yields on 182-day bills shot up to 20.331 percent from 14.551 percent.

A shortage of shilling liquidity has also driven up overnight lending rates, reaching about 27 per cent this week from 13 percent earlier this month.
Another trader said corporate demand for dollars was also subdued.

Demand for foreign exchange usually drops off at the start of the month, gradually picking up later in the month when importers have payment deadlines to meet.