NAIROBI: Kenya's shilling weakened on Tuesday on corporate demand for the US currency, reversing the gains made last week after an unexpected influx of foreign direct investment.
By 0850 GMT, the shilling was trading at 91.65/75 to the dollar, after closing at 91.50/60 to the dollar on Monday.
"We've surrendered all the gains made last week, as demand (for the dollar) has picked up following a period of relatively good dollar inflows," said Duncan Kinuthia, head of trading at Commercial Bank of Africa.
"Some of the people who were standing on the sidelines when they saw the lower levels last week, 91.25/35, they came in to buy," he said. "So it was a lot of demand coming in at the same time. That is what has led to the weakening."
Kinuthia said the buyers were drawn from across the oil, telecoms, manufacturing as well as other importers.
The shilling saw some relief last week, boosted by hard currency inflows that came into the market last week from coffee and tea earnings, transfers by non-governmental organisations and foreign direct investment into real estate.
Prior to last week's strong gains, the shilling has lost ground steadily in the past 12 months or so, partly driven down by a spate of militant attacks that hit the tourism industry, a vital source of dollar revenues, and the strength of the dollar.
Comments
Comments are closed for this article.