Kenyan shilling firm, tea earnings meet dollar demand

The Kenyan shilling was firm on Tuesday, with modest demand for dollars met by inflows of foreign exchange from tea exports.

Shares also closed little changed. At the 1330 GMT close, commercial banks posted the shilling at 102.15/25, the same as Monday’s close.

Traders had noted some light demand for dollars from companies in early business.

“Today we saw some flows from the tea sector, and earlier pressure seen in the morning was met with these flows,” said one trader at a commercial bank, adding that he expected the shilling to stay in the 102.00 to 102.50 range in coming days.

The shilling, which is down 11 percent this year, dropped close to a record low in September, before stabilising on the back of high lending rates and central bank interventions.

“There will be end-month demand for dollars but the ominous threat of intervention by the central bank is real so the shilling is still well supported,” another trader said.

Hard currency reserves held by the central bank jumped to $6.7 billion from $6.1 billion at the beginning of October, the central bank said, partly due to purchase of dollars on the interbank market and a syndicated loan taken by the government.

On the share market, the benchmark NSE 20 index shed 0.59 points to close at 4020.55 points.

On the secondary market, government bonds worth a total 370.80 million shillings ($3.63 million) were traded, compared with 5.95 million shillings the previous session.