Kenya’s shilling firms to 4-week high

Kenya’s shilling strengthened to a four-week high on Wednesday due to tight liquidity and commercial banks offloading their long dollar positions, while stocks were down for a fourth straight session.

At close of trade , commercial banks quoted the shilling at 104.55/75 to the dollar, compared with Tuesday’s close of 105.25/35.

“It’s due to people unwinding their long (dollar) positions, and also the overnight rates are quite punitive,” a senior trader at one commercial bank said.

Tight shilling liquidity in the money markets has driven overnight lending rates to shoot up to a high of 28 percent from 13 percent earlier this month.

A second trader said the central bank’s activity in mopping up liquidity had contributed to those high rates.

“They have made it very expensive to run any long foreign currency position,” he said.

The second trader said usual end-of-month corporate demand for dollars was muted, partly because firms were seeking to keep their books balanced for the end of the quarter and so were avoiding holding long dollar positions.

On the Nairobi Securities Exchange, the main NSE-20 Share Index was down 15.71 points, or 0.4 percent, to close at 4,173.52 points.

On the secondary markets, government bonds worth 1.49 billion shillings were traded, up from 301.65 million shillings traded on Tuesday.