Banks quoted the shilling at an average of 100.60 units to the dollar in afternoon trading Thursday. FILE PHOTO | NMG
The shilling regained slight ground to the dollar Thursday
despite ongoing importer demand for
hard currency as liquidity tightened in the market.
hard currency as liquidity tightened in the market.
Commercial banks quoted the shilling at
an average of 100.60 units to the dollar in afternoon trading Thursday,
compared to Wednesday’s closing average of 100.70 units.
While
traders told Reuters news agency reported dollar demand was alive from
merchandise and corporate importers, CBK said the liquidity side showed a
square market, informing its decision to sit out open market operations
Thursday.
On Wednesday, the market was experiencing
excess liquidity, forcing CBK to mop up Sh15 billion through repurchase
agreements where bids stood at Sh40.05 billion.
In its daily update for Tuesday this week, NCBA Bank
predicted that the local currency is likely to remain flow-driven in
the short term adding that it could be as strong as 98.50 units to the
dollar, but also as weak as 102.50 to the same hard currency.
“We expect the home unit to trade within the 98.50-102.50 range
in the short term, as direction remains flow driven,” said the bank.
Dyer
and Blair Investment Bank predicts in a note to investors that the
Kenyan currency is likely to be in the range of 100.0 to 103.0 units to
the greenback in the course of this year due to the significant growth
in imports. The investment advisors also see the official foreign
exchange reserves as sufficient to maintain the shilling’s strength.
“In
the absence of a material growth in imports, the shilling will remain
largely stable against the dollar (100.0-103.0),” said Dyer and Blair.
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