Kenyan shilling firms after central bank intervenes

Kenya's shilling strengthened from three-year lows on Thursday after the central bank intervened to support the currency by selling dollars, traders said.

By 0905, commercial banks quoted the shilling at 90.00/90.10 to the dollar compared with Wednesday's close of 90.15/25. The currency had firmed to 89.90/90.10 immediately after the central bank's intervention.

The Central Bank of Kenya (CBK) also sold dollars last week, helping the shilling strengthen to below the 90-mark against the dollar before it weakened again this week.

"CBK sold dollars and the shilling has strengthened to around 90 to the dollar. I have seen them selling at least two separate rounds," Martin Runo, senior trader at Chase Bank said, echoing comments from another trader.

Before the central bank's action, Nahashon Mungai at Kenya Commercial Bank had said dollar demand was mainly coming from energy and telecommunications firms, as well as other importers. He had said companies were acting cautiously as the shilling was at levels where the central bank intervened last week.

The shilling has been under pressure this year mainly due to a slump in revenues from tourism, a major hard currency earner that has been hit by a spate of militant attacks. Recently, the dollar has also strengthened against several major currencies.

The central bank has not set any exchange rate level for the shilling and does not generally comment on any intervention, but it has said it has enough reserves to cushion the foreign exchange market against shocks.