Shilling gains the most since August

Money Markets

Commercial banks posted the shilling at102.80/90 per dollar Tuesday morning, up from Monday's closing rate of103.05/15. PHOTO | FILE 

By Reuters

In Summary

• The International Monetary Fund's resident representative in Kenya, Armando Morales, told Reuters the worst of this year foreign exchange volatility was over, adding the central bank's tightening stance was prudent.

The Kenyan shilling strengthened against the dollar on Tuesday, boosted by rising yields on government securities and a positive assessment by the IMF of the handling of recent volatility.

Commercial banks posted the shilling at102.80/90 per dollar Tuesday morning, up from Monday's closing rate of103.05/15.

The International Monetary Fund's resident representative in Kenya, Armando Morales, told Reuters the worst of this year's foreign exchange volatility was over, adding the central bank's tightening stance was prudent.

CHEERED ON

"The shilling was already strengthening so the IMF's comments just cheered it on," said a trader with a commercial bank.

The shilling has risen to its highest since mid-August after yields on government debt jumped.

The weighted average interest rate on the benchmark 91-day Treasury bill rose to 20.637 percent at last week's auction from 18.607 percent at the previous sale.

The central bank has raised the benchmark lending rate by 300 basis points since June to 11.50 percent, and has been mopping up excess liquidity from the market.