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Currencies

Horticulture inflows boost the shilling marginally

A worker at a flower farm in Naivasha. PHOTO | FILE |
A worker at a flower farm in Naivasha. PHOTO | FILE | NMG 

The shilling gained marginally yesterday on support from horticulture dollar inflows, with the promise of better relations between the government and opposition likely to brighten the outlook on the currency in coming weeks.

The shilling exchanged to the dollar at 101.05/101.25 by 3pm yesterday, compared to Thursday’s closing rate of 101.10/30.

Dealers told Reuters news agency that dollar conversions by horticulture exporters coupled with lower demand by importers was offering support to the local currency, which had been range-bound at 101.20 -101.35 for most of the week.

The shilling is normally sensitive to the prevailing political climate in the country, meaning that the announcement yesterday by President Uhuru Kenyatta and opposition leader Raila Odinga that they will work together to unite the country will likely filter through to the market in the coming days.

Large dollar buyers like oil importers tend to build up dollar holdings whenever there is political or economic uncertainty in the country, thus putting pressure on the shilling.

On the other hand, when they are assured of stability, they ease these positions, partly hoping that the shilling would gain and give them an exchange advantage when they buy dollars to settle overseas obligations.

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