Shilling slips to lowest level since 2011

Shilling slips to lowest level since 2011

The shilling slipped on Monday to its lowest level against the dollar since October 2011 despite the Central Bank intervening in the market to sell dollars.

At the close of trade on Monday, commercial banks quoted the shilling at 106.15/35, weaker than Friday’s close of 105.60/70 and close to its all-time low of about 107 against the U.S. dollar.

Traders say the Central Bank sold dollars when the shilling touched 106.20/40, its lowest level in nearly four years.

“There was interbank demand and that was putting pressure on the shilling before the Central Bank stepped in,” said one trader at a Nairobi-based commercial bank.

The Central Bank has in the past few months periodically intervened to support the currency by selling dollars. It also regularly mops up excess liquidity.

The Kenya shilling, down 17.5 percent this year, has come under pressure from a broad rally in the dollar, the high current account deficit and poor tourism inflows after attacks by Somalia’s al Shabaab insurgents.

The NSE 20 share index ended 60.32 points higher, or 1.45 percent, to close at 4,194.73 points.

The index was buoyed by I&M Bank, which rose 10.28 percent to close at 118 shillings after announcing it planned to buy locally-owned Giro Commercial Bank.

British American Tobacco Kenya gained 9.91 percent to close at 743 shillings.

Aly Khan Satchu, an independent trader, said a sell-off in Kenyan shares by foreign investors appeared to have paused but warned the index, down about 19 percent this year, could lose more ground if emerging market funds suffer outflows.

“If they continue to see redemptions, then Kenya will get hit straight away,” said Satchu.

On the secondary market, government bonds valued at 370 million shillings (USD 3.48 million) were traded, up from 166 million shillings on Friday.

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