Kenya Shilling steady, central bank to mop up Sh10bn

The Kenyan shilling was steady Monday with traders watching for any action the central bank would take to see what direction the shilling would take.

At 0735 GMT, commercial banks quoted the shilling at 90.75/85 to the dollar, the same as Friday’s close.

“There is no demand in the market. The market has been thin, so the moves are not really because of demand or supply,” Sheikh Mehran, head of trading at I&M Bank, said.

“All eyes, of course, would be on CBK (Central Bank of Kenya) actions. They have been mopping up.”

On Friday, the central bank mopped up Sh8.65 billion in excess liquidity from the money markets. Mopping up excess liquidity makes it relatively more expensive to hold long dollar positions, which partly supports the shilling.

In the past, the central bank has also sold dollars in the market whenever traders said the shilling approached 90.50 to the dollar.

Most recently, traders said the bank sold dollars on December 30.

“With the key 91.00 level in sight and market macro factors pointing to a softer local currency, we see a greater possibility on intervention in the coming days,” Commercial Bank of Africa said in its daily market report.

CBK officials later said they planned to mop up Sh10 billion ($110.3 million) in excess liquidity from the money market using repurchase agreements.

Traders forecast the shilling, which has lost 0.2 per cent versus the dollar so far this year, to trade in the 90.50 to 91.00 range in coming days. -- Reuters