Kenyan shilling holds steady, dollar inflows likely to keep up support
25 June 2014, 08:24
Nairobi - The Kenyan shilling was stable against the dollar on Tuesday and traders said it was likely to remain supported in the days ahead due to higher levels of expected hard currency inflows.
At 0720 GMT, commercial banks posted the shilling at 87.30/40 per dollar, the same level where it closed on Monday.
Traders said tight liquidity in the money markets was also helping to support the shilling.
"It is expected to be well supported because liquidity has been tight in the last two days," said a senior trader with a leading commercial bank.
The average interest rate on the overnight borrowing market for banks has nearly doubled to 6 percent since June 13 as firms paid their quarterly taxes.
The issuance of Kenya's debut Eurobond for $2 billion last week turned market sentiments positive, boosting the shilling.
The feel-good factor was reinforced by the World Bank, which said on Monday it had committed $4 billion to Kenya in the next four years, pointing to a sustained flow of foreign exchange into the economy.