Kenya shilling falls on high dollar demand from retail importers

The Kenya shilling weakened slightly against the U.S. dollar on Tuesday following increased dollar demand from importers.

The local currency traded against the dollar at 103.4, data from the Central Bank of Kenya (CBK) showed Tuesday, down from 103.3 at the close of last week ahead of Easter holiday.

Commercial banks, however, quoted the shilling at 103.45 as traders blamed the fall to increased dollar demand from oil importers.

The shilling was under pressure last week forcing the apex bank to sell some dollars to strengthen it. Central Bank data indicated that the regulator used some 50 million dollars last week as foreign exchange reserves dropped from 8.02 billion dollars or 5.3 months of import cover to 7.9 billion dollars or 5.2 months of import cover.

Analysts at Cytonn, a Nairobi-based investment firm, noted that in the short-term, the shilling is being affected by retail importers' demands and a rise in global oil prices.

However, in the long-term, the shilling would continue to come under pressure due to the global strengthening of the dollar ahead of a planned rate hikes in the course of the year.

Last Thursday, the shilling ended the week flat at 103.3 but on a year-to-date basis, the shilling has depreciated against the dollar by 0.9 percent. Endit