Kenyas shilling gains on tight liquidity

Kenyas shilling gains on tight liquidity

The Kenyan shilling strengthened on Friday, on the back of a shortage of liquidity in the local currency and helped by the U.S. Federal Reserve’s decision not to raise rates.

At the official close, commercial banks quoted the shilling at 105.15/25 to the dollar, compared with Thursday’s close of 105.55/106.65.

“What we have been seeing is rates have been rising up on the short end, overnight particularly,” said one senior trader.

He noted that overnight lending rates had risen to almost 25 percent from 12.9 percent earlier this month, adding this was prompted some market participants to trim dollar holdings.

Despite Friday’s slim gains, the shilling has lost about 14 percent of its value against the dollar so far this year, almost touching a record low of 106.80 set in October 2011 last week.

Global dollar strength, an expanding trade deficit and poor tourism inflows have hurt it, but sporadic central bank dollar sales have helped slow the slide.

The Federal Reserves decision not to raise rates offered some respite for emerging market currencies, including Kenya, traders said.

On the equity market, the benchmark NSE 20 Share Index shed 12.69 percent to close at 4236.26 points.

On the secondary market, government bonds valued at 447 million shillings ($4.26 million) were traded, from 56 million shillings the previous day.

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kenya shilling kenyan shilling dollar Federal Reserves

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