The Central Bank of Kenya (CBK) building in Nairobi. FILE PHOTO | NMG
The Kenya shilling slightly strengthened beginning of the week
compared to closing Friday, days after foreign exchange reserves
increased.
The Central Bank of Kenya (CBK) showed the
shilling traded at an average of 100.15 units to the dollar on Monday
while Reuters data showed it at 100.30 in early on Tuesday. Forex
reserves rose by $60 million or Sh6 billion last week to stand at $8.136
billion or Sh816.04 billion. The unit had
closed at 100.31 to the greenback last Friday.
closed at 100.31 to the greenback last Friday.
The new level of reserves
represented 5.33 months of import cover compared to the previous week’s
$8.076 billion or Sh810.02 billion, which was equivalent to 5.29 months
of similar cover.
Besides the strong reserves, market analysts said inflows and low dollar demand was responsible for the stronger shilling.
“The
shilling strengthened against the US dollar by 0.5 percent…This was
boosted by strong dollar inflows against lower importers’ demand for the
hard currency. Usable foreign exchange reserves held at the central
bank surged by $60 million to $8.14 billion (equivalent to 5.33 months
of import cover),” said Kingdom Securities.
Dyer &
Blair Investment, however, said there might be some weakness as the year
progresses due to pressure from foreign currency-denominated loans,
such as the $750 million or Sh75 billion sovereign bond that is set to
mature in June.
“We remain cautious on the shilling
over the medium term given Kenya’s significant foreign currency debt
maturities, tightening of global monetary policy and rising concerns of
an economic recession in (the) US and China,” said Dyer & Blair.
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