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Treasury, October 29, 2015: By Joseph Kipkoech
The shilling seems to be healing curve against the US dollar after it hit the roof in mid September when it exchanged at 106.2. On Monday commercial banks quoted it at 102.1 to the dollar.
Market watchers say it is just a matter of time before the shilling goes back to its level in January 2016 when it exchanged at 90.7 to the dollar. The move follows the rising interest rate on Treasury Bills.
Meanwhile, the shilling was steady yesterday and traders said it was expected to keep a firm bias, helped by foreign investor flows into government securities.


At 10.20am, commercial banks quoted the shilling at 101.60/80 to the dollar, the same as Monday’s close. A trader at one commercial bank said the shilling was expected to continue drawing support from investors attracted by Kenya’s high yielding Treasury bills, whose interest rates are above 22 per cent.
“We have seen the shilling well-supported with the aggressive bidding for the securities,” the trader said. A second trader at another commercial bank said the shilling was also being boosted by low demand for dollars among importers.
The shilling has lost 10.8 per cent versus the dollar so far this year. The first trader said liquidity had improved in the money markets, but added that whether this led to the shilling weakening would depend on whether the government was willing to sell Treasury bills at higher yields this week.
“So it all depends on the government, how aggressive it will be in picking up the excess liquidity in the government (Treasury bill auction),” the trader said. Last week, the National Treasury Cabinet Secretary Mr Henry Rotich said his Ministry and Central Bank of Kenya are working on a formula to bring down the interest rates.
Equity Group Chief Executive Officer Mr James Mwangi said he is optimistic the shilling will exchange below the 100 shilling mark, adding that its decline was temporal. He said although the US economy may still be on the growth path, other factor that contributed to the shilling decline will be over.

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