Kenya shilling has appreciated slightly against the U.S. dollar in the last one week, putting less pressure on the country’s foreign exchange reserves.
The currency, according to the Central Bank of Kenya, traded Tuesday at 103.6 against the U.S. dollar from 103.8 last week.
“The shilling has appreciated since last week, gaining marginally by 13 basis points,” noted Cytonn, a Nairobi-based investment firm.
Cytonn attributed the gain to low dollar demand and rise in dollar inflows from non-governmental organisations. But it is not only against the dollar which the shilling has appreciated.
The Kenyan currency has gained against all its peers in the East Africa Community, specifically the Tanzanian and Ugandan shilling and Rwanda and Burundi Francs.
The shilling had hit a low of 104 last month against the dollar forcing the CBK to dig into its foreign exchange reserves to bolster it.
“The forex reserves have now stabilised, an indication of the confidence of the Central Bank with the current levels of the shilling. The Kenya Shilling trades freely, but the Central Bank occasionally intervenes in the market to reduce the rate of the currency volatility,” noted Cytonn Tuesday.
However, on a year-to-date basis, the local unit has depreciated against the dollar by 1.1 percent.
Similarly, the overall level of forex reserves have reduced to 6.9 billion dollars, an equivalent to 4.6 months of import cover, from 7.8 billion dollars in October 2016, an equivalent to 5.2 months of import cover. Enditem