Kenya shilling steady against the dollar

Kenya’s shilling was steady on Thursday, but could weaken in coming days as offshore investors pull back after yields on government debt dropped, while the stock exchange’s main index dipped.

At close of trade, commercial banks quoted the shilling at 102.25/35 to the dollar, the same as Wednesday’s close.

Yields on Kenyan Treasury bills have fallen in the past two weeks from above 20 percent to lower double digits, with the 91-day bill at 13.763 percent last week, making them less attractive to offshore investors.

“The strength that we saw on the back of portfolio flows could start reversing in that the yields have come off significantly and we may see some of that flow headed out going to chase yield elsewhere,” a senior trader at one commercial bank said.

The central bank has intervened several times this week to sell dollars, keeping the currency from reaching the 102.50 mark, with one trader saying it was in the market on Thursday morning. The central bank does not usually comment on interventions.

The shilling has been under pressure this year, partly because of global dollar strength and partly because of domestic issues, such as a widening trade gap and budget deficit.

On the Nairobi Securities Exchange, the main NSE-20 Share Index was down 2.47 points to close at 3,916.62 points. On the secondary market, government bonds valued at 2.58 billion shillings were traded, up from 1.19 billion shillings on Wednesday.