Kenya shilling holds steady, debt inflows eyed
14 January 2014, 14:19
Nairobi - The Kenyan shilling held steady against the dollar on Tuesday as the market anticipated that good flows from offshore investors would keep it well-supported in the short-term.
At 0650 GMT, commercial banks posted the shilling at 86.15/35 per dollar, barely moved from its closing level on Monday.
"If you look at the fundamentals they still favour a strong shilling," said Robert Gatobu, a trader at Bank of Africa Kenya, citing the upcoming sale of a 10-year Treasury bond worth up to 10 billion shillings.
The auction for the bond is scheduled for January 22.
Traders expect the bond to attract foreign investors keen on relatively higher yields. Officials are planning to start marketing the country's debut Eurobond for at least $1.5 billion later this month or in February.
Coupled with stable inflation and foreign exchange rates, the anticipated good hard currency inflows have curbed demand for dollars, as importers wait for the shilling to firm further, Gatobu said.
"They know maybe in a months time we could see the shilling getting stronger," he said.
Traders said the bank's rate-setting meeting on Tuesday was not likely to have much impact on markets.
Its monetary policy committee is expected to hold rates at 8.50 percent, with inflation on target at a little more than 7 percent and the exchange rate stable, they said.