Shilling firms before bond auction
25 September 2013, 17:57
Nairobi - The shilling firmed on Wednesday ahead of a 12-year infrastructure bond auction expected to see foreign players bid for 10 to 15 percent of the 20 billion shillings in debt on offer.
Tight liquidity due to tax payments by companies to the government last week has helped the shilling withstand jitters over the Al-Shabaab attack on Westgate mall that killed at least 72 people.
Traders anticipate strong demand for the bond offer, including from offshore investors, and they said tight supplies of shillings in the banking sector had prompted some players to trim bets on gains for the dollar.
"The shilling might continue strengthening due to the tight liquidity and also (dollar) inflows expected after the auction," said John Muli, a trader at African Banking Corporation.
The shilling was posted at 87.10/30 per dollar by 0708 GMT, stronger than Tuesday's close of 87.30/50.
In the money market, the weighted average interbank lending rate rose for the 11th straight session to 8.6198 percent on Tuesday, from 8.4075 percent on Monday.