The Kenyan shilling weakened against the dollar to a near five-year low on Tuesday due to importer demand and excess liquidity in the money markets. FILE PHOTO | NMG Kenya’s shilling strengthened on Thursday after the central bank sold dollars to banks to stem persistent weakness in the local unit, traders said.
At 12:30pm local time, commercial banks quoted the shilling at Sh103.60/80 per dollar, up from 104.15 when the central bank intervened earlier in the session.
It had slid more than 1 percent in seven straight trading sessions.
The shilling sank to its lowest level against the dollar in nearly five years earlier this week due to heightened political risk, a firmer dollar, concerns about export earnings and excess liquidity in the money markets.
"CBK (Central Bank of Kenya) have come in, they’ve sold dollars," said a trader at one commercial bank.
The bank also sought to mop up 15 billion shillings from the market through seven-day repos.
The weighted average interest rate on the overnight borrowing market for banks has hovered around 2 percent last month, making it cheaper for banks to bet against the currency by buying up dollars.