NAIROBI: Kenya’s shilling weakened further against the dollar on Friday amid heavy demand for the U.S. currency from the energy and telecoms sectors and a general weakening of emerging market currencies.
At the close of trade at 1330 GMT, commercial banks quoted the shilling at 105.60/70 per dollar, weaker than Thursday’s close of 104.95/105.15. The shilling has been edging closer to its all time low of about 107 to the dollar, set in October 2011.
“We have a mismatch of supply and demand,” said a trader at a Nairobi-based commercial bank. “Based on market fundamentals and market play, the shilling looks weaker.” The local currency could reach 107.50 in the short to medium term, “maybe in a month’s time,” the trader said.
The Kenyan currency, down 16 percent this year, has come under pressure from a broad rally in the dollar, Kenya’s high current account deficit and poor tourism inflows after attacks by Somalia’s al Shabaab insurgents. The shilling also remains vulnerable to further losses as emerging market currencies wobble.
Kenya’s central bank has in the past few months periodically intervened in the market to support the currency by selling dollars. It also regularly mops up excess liquidity. On the secondary market, government bonds valued at 166 million kenyan shillings ($1.57 million) were traded, down from the 232 million worth of bonds traded a day ago.
