Markets & Finance

Central bank sells dollars as shilling hits 3-year low

dollar shilling

After CBK's move the shilling traded at Sh94.20/30 to the dollar, its closing level on Friday. PHOTO | FILE

Central bank sold dollars for the third time in April after the shilling weakened to a three year low on Monday, traders said.

The bank intervened to help stabilise the shilling after it eased to Sh94.40/50 to the dollar, its lowest level since November 2011, they said. After the central bank's move the shilling traded at Sh94.20/30 to the dollar, its closing level on Friday.

"They are not trying to defend any level, they are just trying to smooth it out," said a trader at one commercial bank. Two other traders confirmed the bank had been in the market selling dollars.

The bank last sold dollars on April 21 and before that on April 7.

The shilling, down 4.15 per cent against the dollar this year, has been hit by a fall in foreign exchange revenues from tourism after a number of militant attacks scared visitors away. Uneven rainfall has also hit the horticulture sector, another top foreign exchange earner.

Earlier in the session, traders said the shilling was likely to remain under pressure in coming weeks, even if the central bank intervened to cushion local currency weakness.

"This is a continuation of a trend where we see the shilling touch new lows almost on a daily basis," Joshua Anene, a trader at Commercial Bank of Africa, said before the bank sold dollars.

"The issue is fundamental weaknesses in our economy."