Kenya shilling rises as dollar reserves swell

The Kenyan shilling gained more ground against the U.S. dollar Friday to close the week at a high of 103.1 boosted by Diaspora inflows.

The local unit has been on a rally against the dollar since the start of the week following increased inflows from investors buying Treasury bonds and bills and inflows from the Diaspora amid low demand of dollars from retail importers.

Commercial banks traders, however, quoted the currency at a stronger position of 103.05, attributing the surge to hard currency inflows from Kenyans living abroad.

On the other hand, the Central Bank of Kenya (CBK) put the shilling at the cautious level of 103.2 against the dollar.

On Monday, the shilling gained against the dollar 0.05 percent to close the day at 103.3, strengthening further mid-week to 103.2 to hit the new level on dollar inflows from investors buying government securities.

Dollar inflows during the week were expected from the tap sale of two ten-year fixed bonds worth 69 million dollars and other government borrowing boosting foreign exchange reserves.

On Friday, CBK data showed that Kenya's forex reserves stood at a new high of 8.3 billion dollars or equivalent of 5.5 months of import cover from 8 billion dollars or equivalent to 5.3 months import cover previous seek.

The surge means the apex bank can support the shilling in case it comes under pressure from other currencies. Endit