AIRLINK 74.00 Decreased By ▼ -0.25 (-0.34%)
BOP 5.14 Increased By ▲ 0.09 (1.78%)
CNERGY 4.55 Increased By ▲ 0.13 (2.94%)
DFML 37.15 Increased By ▲ 1.31 (3.66%)
DGKC 89.90 Increased By ▲ 1.90 (2.16%)
FCCL 22.40 Increased By ▲ 0.20 (0.9%)
FFBL 33.03 Increased By ▲ 0.31 (0.95%)
FFL 9.75 Decreased By ▼ -0.04 (-0.41%)
GGL 10.75 Decreased By ▼ -0.05 (-0.46%)
HBL 115.50 Decreased By ▼ -0.40 (-0.35%)
HUBC 137.10 Increased By ▲ 1.26 (0.93%)
HUMNL 9.95 Increased By ▲ 0.11 (1.12%)
KEL 4.60 Decreased By ▼ -0.01 (-0.22%)
KOSM 4.83 Increased By ▲ 0.17 (3.65%)
MLCF 39.75 Decreased By ▼ -0.13 (-0.33%)
OGDC 138.20 Increased By ▲ 0.30 (0.22%)
PAEL 27.00 Increased By ▲ 0.57 (2.16%)
PIAA 24.24 Decreased By ▼ -2.04 (-7.76%)
PIBTL 6.74 Decreased By ▼ -0.02 (-0.3%)
PPL 123.62 Increased By ▲ 0.72 (0.59%)
PRL 27.40 Increased By ▲ 0.71 (2.66%)
PTC 13.90 Decreased By ▼ -0.10 (-0.71%)
SEARL 61.75 Increased By ▲ 3.05 (5.2%)
SNGP 70.15 Decreased By ▼ -0.25 (-0.36%)
SSGC 10.52 Increased By ▲ 0.16 (1.54%)
TELE 8.57 Increased By ▲ 0.01 (0.12%)
TPLP 11.10 Decreased By ▼ -0.28 (-2.46%)
TRG 64.02 Decreased By ▼ -0.21 (-0.33%)
UNITY 26.76 Increased By ▲ 0.71 (2.73%)
WTL 1.38 No Change ▼ 0.00 (0%)
BR100 7,874 Increased By 36.2 (0.46%)
BR30 25,596 Increased By 136 (0.53%)
KSE100 75,342 Increased By 411.7 (0.55%)
KSE30 24,214 Increased By 68.6 (0.28%)

shillingNAIROBI: Kenya's shilling firmed to a more than one-year high against the dollar on Monday, driven by tight liquidity encouraged by high interbank rates, with demand high for Kenyan bonds.

The shilling touched 82.25-45 against the dollar, a level last reached on Feb 28, 2011. It was quoted at 82.40/60 at 0711 GMT, firmer than Friday's close of 82.60/80.

"Tight liquidity is supporting the shilling. Guys went heavy on government securities and that's causing the lack of shillings," said Julius Kiriinya, a trader at African Banking Corporation.

Kenya's acting finance minister has hinted at a ceiling of 82 shillings per dollar to protect exporters, and the currency's gains could be checked by energy sector importer demand for dollars and central bank buying to boost its hard currency reserves.

"Rising crude prices, a food shortage gap that needs to be funded coupled with purchases by authorities to beef up reserves could check the shilling's ascent," said Bank of Africa in a daily report.

The weighted average interbank lending rate has risen for six straight sessions, to 25.4 percent on Friday, and stands above the central bank's discount window rate of 24.0 percent.

Rising rates for bank-to-bank transactions, which offer banks high returns from lending shillings, also make them less inclined to hold dollars, thereby supporting the local currency.

A report by parliamentary committee criticised the central bank for letting the shilling plunge last year, after it kept the cost of borrowing at the discount widow below the interbank and T-bills rates, giving commercial banks an arbitrage opportunity.

Yields on government securities have soared, rising to above 20 percent in December from a low of 2 percent in January as inflation rose to 19.7 percent in November.

Copyright Reuters, 2012

Comments

Comments are closed.