Shilling in modest rise against dollar on inflow support

The Kenya shilling appreciated slightly towards the end of last week, but some market players said it was inclined to a depreciation towards the 101.70/102.00 level against the dollar in the short term.

The shilling had opened last week with a weakening bias due to normal end month dollar demand from importers, but as that abated, inflows from horticulture exports offered support and led to modest gains against the greenback.

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“We expect the shilling to consolidate within the 100.70–102.00 range in the interim as the market remains flow-driven,” said Commercial Bank of Africa in an update released on Thursday.

“Dollar inflows from the agricultural sector turned the tide in favour of the shilling.”

The Kenyan financial markets remained closed on Friday for the Madaraka Day holiday.

The shilling averaged 101.48 units to the greenback at the opening of the market on Thursday having appreciated from 101.60 recorded on Wednesday, when the latest depreciation streak reached its peak before the slight appreciation.

However, quoting traders, Reuters reported that the currency had firmed up further on Thursday, helped by dwindling importer demand.

The news agency said that by mid-afternoon, commercial banks quoted the shilling at 101.30/50 per dollar, compared with 101.40/60 at Wednesday’s close.

Support has also come in from diaspora inflows, which have been rising month on month to record levels. Central Bank is also holding a sizeable chest of foreign reserves of $9.1 billion, which can be deployed to iron out volatility in the exchange rate.

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