NAIROBI, Sept 8 – Kenya’s shilling is likely to firm next week after a robust response from government to try to stem its downward spiral, while its Ugandan counterpart may also be bottoming out of a long slump as soaring bond yields attract foreign buyers.
KENYA
Kenya’s shilling is seen getting support from the central bank after it sold the U.S. currency for the first time in two years and the government said it had asked the International Monetary Fund (IMF) to front-load a credit facility.
The Central Bank of Kenya (CBK), which has said in the past selling dollars would not achieve much and would drive foreign exchange reserves down, sold an undisclosed amount of dollars on Tuesday, helping the shilling rise as much as 2.4 percent.
President Mwai Kibaki weighed in on Thursday, saying the government was seeking an early disbursement of funds under an agreed IMF facility to ease pressure on the shilling and help restore order to domestic markets.
The shilling strengthened 0.64 percent after his remarks to 93.60/80 against the dollar, stronger than last Thursday’s close of 93.90/94.00.
“It has a signalling effect that they are not happy with these levels. Before it was very subtle. Now it’s becoming very bold,” said Duncan Kinuthia, head of trading at Commercial Bank of Africa.
Source: Reuters Africa newsletter
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