The Kenyan shilling strengthened to a 23-week high against the dollar yesterday on the back of inflow from offshore investments in the past week, Reuters data indicated.
The local currency traded at 101.80 units to the greenback as at 1PM, marking the fifth straight day it has strengthened. Bank of Africa (BoA) told its clients in an update to expect the unit could exchange for as high as 101.30.
It said there were inflows from offshore investors buying government debt, meeting demand from importers on Tuesday.
In its weekly report on Monday, the Central Bank of Kenya (CBK) also reported the shilling was appreciating with increased capital inflows.
The unit appreciated to below Sh102 to the dollar most recently on November 11, from an average of 103.19 on the previous day. The strengthening trend has been apparent for the whole of the past week.
“The shilling gained against the dollar on Tuesday, with inflows from offshore investors buying government debt meeting demand from merchandise importers. Expected range today (November 20) is 101.30-102.30,” said BoA.
In the week that ended on November 14, the local currency stood at an average of Sh102.45, higher than the Sh103.19 for the week that ended on November 7.
“The Kenya shilling strengthened against major international and regional currencies during the week ending November 14, amid capital inflows,” said the CBK in the report for the week ending last Friday.
The last time the shilling stood at below 101.80 was on June 14 when it averaged Sh101.55 before falling to an average of Sh101.82 the following day.
NCBA Group reported on Tuesday that the market experienced foreign currency inflows at a time of low dollar demand that kept the local currency on a winning streak.
“The shilling continued its winning streak versus the greenback on Tuesday on account of abated dollar demand. Demand for the greenback remained sound through the session but the local unit held its ground steady, supported by foreign currency inflows from various sectors of the economy,” said NCBA in its market update.
The bank forecast the shilling to remain within the currency range as long as fundamentals did not change. “Looking ahead (starting November 20), we see shilling trading within the current ranges in the absence of new fundamentals to provide price direction to the local unit,” said NCBA.