The shilling has clocked a new four month-high against the dollar buoyed by inflows and remittances from offshore investors purchasing shares
on the stock market.
In early trading, commercial banks quoted the shilling at 102.05/25 to the dollar, compared with 102.25/45 at Tuesday’s close. The impressive run against the greenback comes on the back of a positive post-interest rate capping regime which has given it new impetus.
According to Refinitiv data, the local currency last traded at its present level on July 4.
On its first day of trading after the rates cap purge, the shilling was quoted at 103.00/20 per dollar, compared with 103.25/45 registered the previous day.
In August, the Central Bank of Kenya (CBK) sold dollars to banks to stem persistent weakness in the local unit.
It had sank to its lowest level against the dollar in nearly five years in late July due to a firmer dollar, concerns about export earnings and excess liquidity in the money markets.
To further save the shilling, the CBK also sought to mop up Sh15 billion from the market through seven-day repos.
The weighted average interest rate on the borrowing market for banks had hovered around two per cent in July, making it cheaper for banks to bet against the currency by buying up dollars.
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