News

The Kenya shilling continued to weaken due to importer dollar demand from the energy sector and Central Bank of Kenya (CBK) limitations in preventing the local unit from weakening.
On Tuesday, Commercial banks quoted the shilling at 102.75/85 to the dollar, compared with Monday’s close of trading at 101.75/85.


Analysts said the interbank rate, which is at 18 percent, had offered short-term support due to illiquid markets, but they saw the shilling coming under pressure from continued demand by importers.
Risks to the shilling still persist, owing to the widening current account deficit, a strong dollar in the international market and slowdown in forex inflows into Kenya on account of low returns from the tourism sector and other key foreign exchange earners such as coffee and tea.
So far this year, the shilling is down 11.5 percent against the dollar but still off a three and
half-year low of 103.85/95 hit in mid-July.
The CBK said on Monday it planned to mop up Sh2 billion of excess liquidity in the market to provide support to the shilling. Last week, the CBK directed banks to limit foreign exchange transactions to 10 percent of their core capital.
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