A currency dealer counts Kenya shillings at a money exchange counter in Nairobi October 23, 2008. REUTERS/Antony Njuguna
NAIROBI, March 2 (Reuters) – The Kenyan shilling edged higher on Friday on waning importer demand for dollars while the market awaited direction from the central bank after remarks by the acting finance minister that the shilling’s rise should be capped.
The local currency has been on the backfoot since Robinson Githae told Reuters on Tuesday he had instructed the central bank to limit the shillings’ appreciation beyond 82 per dollar, resulting in dollar buying.
At 0700 the GMT, commercial banks quoted the shilling at 83.10/20 per dollar, up from 83.25/45 at the close on Thursday.
“There is little demand for dollars as end month tickets have been exhausted,” said Dickson Magecha, a trader at Standard Chartered Bank. “We also have better supply from across the sectors, development agencies and exporters.”
The shilling has lost 0.7 percent so far this week. Traders said the market was waiting for the central bank to clarify the acting finance minister’s directive to cap the shilling’s strength to prevent exporters suffering too much.
“Some banks were shedding their long (dollar) positions which they have been carrying during last month,” Kennedy Butiko, deputy head of trading at Bank of Africa said.
Traders said high interest rates and attractive yields in the fixed income market were expected to continue lending support to the shilling, as inflation eases.
Inflation slowed for the third straight month to 16.7 percent in February from 18.3 percent a month ago, helped by central bank’s tight monetary policy that saw its key lending rate ramped up to 18 percent in December.
The Monetary Policy Committee is set to meet on March 6.
(Reporting by Beatrice Gachenge; Editing by Kim Coghill)
