Kenyan shilling stable vs dollar, eyeing c.bank
16 July 2012, 12:16
Nairobi - The Kenyan shilling was stable against the dollar on Monday, but traders said there were hopes of gains on the back of the central bank's tendency to tighten excess liquidity in the market.
The bank has stepped up its intervention in the market, curbing money supply via repurchase agreements to help the local currency gain 1.2 percent so far this year.
Traders attributed excess liquidity on Monday to maturity of government bonds and bills, which banks are not keen to reinvest in the debt market due to falling yields.
Kenyan yields, which surged on the back of a jacking up of official interest rates last year, have come down in the past month and commercial banks, the main buyers of government securities, opt to put their money in longer dated repos instead.
At 0650 GMT, commercial banks posted the shilling at 84.00/84.20 per dollar from Friday's close of 84.10/30. "We are waiting for the central bank to intervene," said John Muli, a trader at African Banking Corporation.
"If they come in, we might see a strong shilling." The central bank, which sought to mop up 2 billion shillings ($23.77 million) on Friday, received bids worth 8 billion shillings, signalling excess liquidity. It accepted 2 billion shillings at 14.4 percent.
Chris Muiga, a trader at Kenya Commercial Bank said importers, mainly from the energy sector, were likely to take advantage of a strong shilling to buy dollars, which could put pressure on the local currency.