Kenya shilling loses as U.S. dollar demand swells

The Kenya shilling declined Wednesday following increased U.S. dollar demand from retail importers, in particular those shipping in oil.

The Central Bank of Kenya quoted the shilling at 103.2 to the U.S. dollar, down from 103.14 the previous day, as the currency yielded to pressure from international currencies.

Commercial banks, however, put the value of the shilling against the dollar Wednesday at a lower level of 103.4 as traders blamed the decline on increased dollar demand from oil importers amid low inflows.

On Tuesday and Monday, the local currency declined 0.05 percent.

The shilling had gained to stand at a high of 103 last week following increased inflows from investors buying Treasury bonds and bills and inflows from the diaspora amid low demand for dollars from retail importers.

Analysts expect the shilling to weaken further in the coming days, primarily driven by more dollar demand from importers.

The east African nation's dollar reserves currently stand at an average of 8 billion dollars, or an equivalent of 5.4 months of import cover, according to Central Bank data, an indication that the regulator would intervene if the shilling depreciates further. Endit