Kenya shilling strengthens on central bank support

The Kenya shilling strengthened against the U.S. dollar Tuesday standing at 102.7 from 102.9 the previous day, with the Central Bank said to have shored up the currency.

The apex bank bolstered the local unit ahead of increased end month dollar demand from oil importers expected to put pressure on the shilling.

The apex bank quoted the shilling at 102.71 on Tuesday, a stronger level from 102.91 on Monday, when the shilling lost 0.04 percent.

Demand for the dollars, according to analysts, would peak end month as importers seek to bring in new stock of oil and other goods.

The apex bank's foreign exchange reserves rose last week to a record high of 7.8 billion dollars or 5.1 months of import cover following disbursement of 800 million dollars syndicated loan.

The huge dollar reserves, therefore, provide an adequate buffer and aid in the Central Bank's efforts to stabilize the shilling. The regulator normally buttresses the shilling when it faces pressure by selling dollars in the market.

Monday, the bank's Monetary Policy Committee held the base lending rate at 10 per cent, an indication of their satisfaction with the macro-economic environment including the value of the shilling against other world currencies.

The committee was widely expected to tighten the monetary policy a little to prevent further volatility on the shilling and counter the looming rise in the U.S. Federal Reserve rate. Endit