NAIROBI: Kenya’s shilling gained ground on Friday, boosted by rising interest rates on government securities and tea agencies selling dollars to pay bonuses to farmers.
At the 1330 GMT close of trade, commercial banks quoted the shilling at 103.90/104.10 to the dollar, compared with Thursday’s close of 104.40/50.
“We have the current high yields of government securities making the shilling quite attractive, so that definitely is going to attract foreign inflows,” a senior trader at one commercial bank said. “And secondly tea farmers are getting their bonuses. Tea is sold in foreign currency and converted to Kenya shillings.”
Rising yields on Treasury bills have attracted offshore investors. At this week’s auction, yields rose above 20 percent on 91-day, 182-day and 364-day T-bills.
Traders say a shortage of shilling liquidity has also been supporting the currently and keeping overnight lending rates high. This week, overnight rates rose to as high as 28 percent, up from 13 percent in early September. On the secondary market, government bonds valued at 339.2 million shillings were traded, down from 1.74 billion a day ago.
