Kenya shilling weakens slightly


Kenya shilling weakens slightly

Kenya’s shilling was a touch weaker against the dollar on Thursday, with the local currency seen vulnerable to further losses due to loosening liquidity following a sharp fall in government debt yields.

Commercial banks quoted the shilling at 101.95/102.05.to the dollar, slightly weaker on Wednesday close of 101.85/95.

“Rates are coming off, liquidity is improving, so we could see it see begging to weaken towards 102.50 levels,” said one Nairobi-based trader.

The shilling, down about 12.7 percent against the dollar this year, had firmed in recent weeks due to inflows of dollars from offshore investors chasing high-yielding government debt.

But in Wednesday’s auction the debt yields plummeted, even if they still remain at an elevated level.

The yield on the 182-day bill fell to 16.492 percent from 21.028 percent last week, while the yield on the 364-day bill dropped to 17.130 percent from 21.212 percent. Traders say rates have dropped due to a $750 million syndicated loan the government secured recently.

In a sign of increasing liquidity in the money markets, the weighted average interbank lending rate fell to 10.12 percent on Wednesday from about 15.1 percent two weeks ago.

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