NAIROBI: The Kenyan shilling strengthened against the dollar on Tuesday, boosted by rising yields on government securities and a positive assessment by the IMF of the handling of recent volatility. At 0640 GMT, commercial banks posted the shilling at 102.80/90 per dollar, up from Monday’s closing rate of 103.05/15.
The International Monetary Fund’s resident representative in Kenya, Armando Morales, told Reuters the worst of this year foreign exchange volatility was over, adding the central bank’s tightening stance was prudent. “The shilling was already strengthening so the IMF’s comments just cheered it on,” said a trader with a commercial bank. The shilling has risen to its highest since mid-August after yields on government debt jumped.
The weighted average interest rate on the benchmark 91-day Treasury bill rose to 20.637 percent at last week’s auction from 18.607 percent at the previous sale. The central bank has raised the benchmark lending rate by 300 basis points since June to 11.50 percent, and has been mopping up excess liquidity from the market.
