Kenya shilling stable on tight liquidity

The Kenyan shilling was little changed on Monday, supported following steady declines against the dollar by an acute liquidity squeeze in the domestic money markets.

Commercial banks posted the shilling at 101.05/15 per dollar, barely changed from Friday’s closing rate of 101.00/20.

“Liquidity is pretty tight,” said a senior trader at a commercial bank, adding that this would keep supporting the local currency.

The weighted average overnight lending rate on the interbank market rose to 22.9352 percent on Friday from 22.1811 per cent the previous day.

Policymakers started a tightening cycle in June, raising the benchmark interest rate by a total of 300 basis points since then.

That helped to stabilise the shilling, which is down 11.5 per cent against the dollar this year, mainly due to a firmer dollar, a surge in imports and lower exports earnings caused by a slump in tourism.