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Shilling drops to two-month low as political impasse deepens

Traders said the shilling is buoyed by continued dollar sale by the CBK. PHOTO | FILE | NMG
Traders said the shilling is buoyed by continued dollar sale by the CBK. PHOTO | FILE | NMG 

The Kenyan shilling fell on Thursday to a two-month low as demand for dollars spiked on the back of increased uncertainty over the fate of a presidential re-run scheduled to take place in a less than a week.

The shilling shed 0.2 per cent intraday to close at 103.60/80 against the greenback, a level last reached on August 15, according to Reuters data.

The country is facing a political crisis after the Supreme Court nullified an August 8 Presidential election and asked for a fresh vote to be held in 60 days.

Political grandstanding that saw the main opposition candidate, Raila Odinga, withdraw from the re-run and a senior commissioner of the electoral body resign has dogged the October 26 vote and caused anxiety among investors.

Mr Odinga’s opposition party, NASA, has in recent weeks called for national wide demonstrations by its supporters to push for electoral reforms and postponement of the fresh election.

CBK intervention

The central bank intervened to sell dollars in the foreign exchange market on Wednesday after as increased political pressure weighed on the local currency.

Traders said the shilling, which has remained stable in the last few weeks, is buoyed by continued dollar sale by the regulator, whose foreign exchange reserves now stand at a 4.90 months import cover.

The local currency is also receiving support from increased remittance by Kenyans living abroad.

The country received a record $166.4 million (about Sh17.18 billion) in August and is set to surpass the amount received in 2016, according to central bank data.

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