Shilling under new pressure as CBK support wears off
The shilling closed the week trading at a range of 87.05/87.15 units to the dollar. FILE
The shilling is expected to come under renewed pressure this week as effects of last week’s intervention by the Central Bank wear off, currency dealers have predicted.
The shilling closed the week trading at a range of 87.05/87.15 units to the dollar as per quotes by commercial banks, having opened the week at an average 86.90/87.30 units.
The local unit appeared headed to the 88 levels against the dollar at the beginning of last week when it slid down to a low of 87.55/65 to the dollar, causing Central Bank of Kenya (CBK) to respond by injecting an undisclosed amount of dollars directly into the market on Monday and Tuesday.
“The intervention helped calm the nerves around the shilling, but that said, as with all interventions, the impact is expected to be short term, and the expectation is that the shilling will still weaken against the dollar, mainly due to the current account deficit and interest rate outlook,” said Commercial Bank of Africa senior dealer Joshua Anene.
ABC capital said in a Friday morning market report to clients that importers had bought more dollars towards the end of the week, taking advantage of the local currency gains after CBK’s intervention.
Close at a high
The NSE 20-Share Index closed the week on a high, gaining 87 points during the week to close at 4,807 points having opened the week at 4,720 points.
The bourse saw a marked gain in investor wealth during the week, closing with a market valuation of Sh1.73 trillion, slightly short of the record of Sh1.74 trillion it hit on Wednesday. It had opened the week with at a valuation of Sh1.69 trillion.
Analysts said the bourse has seen increased demand coming in following the June sell-offs and subsequent drop in value of stocks, which left many counters looking attractive to investors.
Real estate developer Home Afrika listed at the beginning of last week on the Growth and Enterprise market segment (GEMs) at a debut price of Sh12, and saw its share doubling in value on the first day of trading.
The share lost 10 per cent on Wednesday, the maximum possible as per NSE trading rules, although it stabilised on Thursday and Friday, closing the week at Sh22.50.
The bonds market saw reduced activity at the end of the week, recording deals worth Sh610 million, a drop from the Sh3 billion turnover on Thursday and Sh1.5 billion on Wednesday.
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