NAIROBI: Kenya’s shilling weakened slightly in early business on Tuesday, under pressure due to some corporate demand for dollars and continuing jitters in emerging markets, traders said. By 0723 GMT, the shilling was quoted at 105.50/60 to the dollar, compared with Monday’s close of 105.40/50.
A report in Kenya’s Business Daily said the central bank’s foreign reserves had slipped to $6.252 billion, or just below four months of imports for the first time since April 2013, dropping under the minimum level the bank endeavours to keep.
One trader, who asked not to be named, said this left the bank less fire power to support the currency. The bank has sporadically intervened to sell dollars, helping the shilling. A central bank official had no immediate comment when asked about the newspaper report.
Last week, the shilling almost hit an all-time low of 106.80 set in October 2011. Traders said the central bank dollar sales had helped meet some of the demand for foreign exchange that had been exerting pressure. A trader said the shilling could slide again, but any weakening was likely to be more gradual since the intervention.
Also providing support, traders said there was a shortage of shilling liquidity, which was driving up overnight rates to about 18 percent from around 13 percent earlier in September.
