Kenya shilling gains against dollar on subdued demand

The Kenya shilling cut its loses against the dollar Thursday helped by the mopping of liquidity and subdued demand.

Commercial banks quoted the currency at 84.90 to the greenback up from 85.15 on Wednesday, as dealers said sentiment that the currency will fall further remains high.

“The currency has gained slightly compared to yesterday (Wednesday) but there is still high demand which could put pressure on the currency,” said Peter Mutuku.

Dealers at Commercial Bank of Africa said there was pent up demand among importers and that the currency will see more pressure at the end of the month nears.

The currency had fallen to 85 against the dollar on Wednesday due to panic among oil importers who had feared the currency could nose dive raising their import bill.

Central bank Thursday sought to mop up 1 billion shillings ($11.8 million) in excess liquidity via repurchase agreements (repos), Reuters reported.

The rising yield on Treasury bills also added premium to local assets giving the shilling support. The average yield on the 91-day Treasury bill rose for the first time since July 26, to 7.647 per cent at auction on Thursday from 7.515 per cent last week, the central bank said.