NAIROBI: The Kenyan shilling firmed early on Tuesday due to tighter liquidity on the money market as investors waited for the outcome of a central bank interest rate-setting meeting.
At 0829 GMT, the shilling traded at 85.25/45 per dollar from Monday's close of 85.40/60.
Duncan Kinuthia, head of trading at Commercial Bank of Africa, said liquidity had tightened after the central bank failed to renew a reverse repo worth 16 billion shilling sold last week.
Tighter liquidity in the money markets pushed the overnight interbank lending rates up to 11.8354 percent on Monday, from 11.7116 percent on Friday.
"With these elevated interest rate it's hard for banks to hold dollars," Kinuthia said.
The bank said it would stay out of the market on Tuesday .
Traders said they widely expected the central bank's Monetary Policy Committee (MPC) to leave its benchmark lending rate on hold at 8.50 percent later on Tuesday after year-on-year inflation slowed in October to 7.76 percent from 8.29 percent the previous month.
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