Currencies

Shilling stable despite US poll, Covid lockdown fears

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Central Bank of Kenya (CBK). FILE PHOTO | NMG

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Summary

  • Data show commercial banks quoted the shilling at between 108.76 and 108.96 yesterday, though it hit Sh108.95 at some point in the afternoon.
  • The shilling had been expected to weaken substantially against the dollar which had rallied in the run up to the US polls yesterday.
  • Reuters, for example reported that the dollar rose as much as 1.2 per cent overnight on Tuesday to hit more than one-month highs versus its rivals and riskier currencies such as the yuan and Australian dollar fell more than one per cent each.

The shilling stabilised against the dollar at 108.86 yesterday, defying expectations that it would weaken on the contested US elections and anticipated tightening of regulations to curb spread of coronavirus in Kenya.

Data show commercial banks quoted the shilling at between 108.76 and 108.96 yesterday, though it hit Sh108.95 at some point in the afternoon.

The shilling had been expected to weaken substantially against the dollar which had rallied in the run up to the US polls yesterday.

Reuters, for example reported that the dollar rose as much as 1.2 per cent overnight on Tuesday to hit more than one-month highs versus its rivals and riskier currencies such as the yuan and Australian dollar fell more than one per cent each.

But the dollar gave back some of its gains to trade up 0.7 per cent as the race tightened, added Reuters.

“From a global perspective, there was strengthening of the dollar as the US went into election mode. The uncertainty of the election helped shore its safe-haven appeal. Now that the US election is behind us, the post-election events will determine continued strengthening of the global reserve currency,” head of research at Genghis Capital Churchill Ogutu said.

“There could be weakening pressure on the shilling in the event the dollar continues gaining strength,” he added.

The shilling had also been expected to weaken on talk of another lockdown.

This, however never happened with President Uhuru Kenyatta only banning political rallies and reviewing the curfew time to between 10pm and 4am until January 3,2021.

The shilling has depreciate by 7.5 percent from 101.34 in the start of the year to current 108.86.