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CORRECTED-UPDATE 1-Kenya cbank acts after shilling hits 1-yr low
January 29, 2013 / 7:53 AM / 5 years ago

CORRECTED-UPDATE 1-Kenya cbank acts after shilling hits 1-yr low

* Cbank injects dollars for the 7th session this year
    * Oil sector dollar orders weigh on shilling
    * Liquidity tightens on bond payments

 (Adds details, traders' quotes)
    By Kevin Mwanza
    NAIROBI, Jan 29 (Reuters) - Kenya's central bank sold an
undisclosed amount of dollars early on Tuesday to support the
local currency after it weakened to a new one-year low on strong
importer demand for greenbacks, traders said.
    The shilling fell 0.4 percent to touch an intraday low of
87.80/88.00 to the dollar, last touched on Jan. 5, 2012, when it
hit 89.00. 
    It recovered to trade at 87.50/70 at 0713 GMT after the
central bank sold dollars, and was still being quoted at the
same level at 0739 GMT.
    "The central bank came in to sell dollars again after the
shilling touched 88," said a trader at one commercial bank.
    The central bank has pumped in dollars during seven
different trading sessions so far this year to support the
shilling. Traders said the shilling had come under pressured
from oil importers buying dollars to meet their end month
supplies.
    "With the central bank's interventions, 88.00 is still the
initial support level," said John Muli, a trader at African
Banking corporation.
    Traders said liquidity had also tightened in the market with
overnight interest rates on the interbank market rising steadily
over 11 straight sessions to 6.67 percent on Monday. 
    The central bank has also been mopping up liquidity using
repurchase agreements (repo) since last year to support the
shilling. On Monday, the bank received bids worth 2.7 billion
shillings for the 4 billion shillings ($45.7 million) it had
offered in repurchase agreements that day.
     It accepted all the bids at a weighted average interest
rate of 6.5 percent. 
    Traders said the central bank could effectively support the
shilling through letting interest rates on repos to rise above 7
percent to encourage banks to offload their liquidity.
    "Liquidity is somewhat tighter as bond payments fall due,"
Muli said.
               ...........................Shilling spot rates
                  .....................Shilling forward rates
                           .......................Cross rates
         ..................................Local contributors
           .......................Central Bank of Kenya Index
          .....................Kenyan Bonds contributor pages
                          ...............Treasury bill yields
        ..................Central bank open market operations
        .........................Horizontal repo transactions
         ,       ................Daily interbank lending rate
              .............................Kenya Bond pricing
             ..................Real time Africa economic data
 <ECI & AFR> ...........................African economic news
          .................................NSE-20 Share Index
         .................................NSE All Share Index
             ...........................FT NSE Kenya 15 Index
             .......................... FT NSE Kenya 25 Index
  SPEED GUIDES:
                                    
            
 
 (Editing by George Obulutsa/Jeremy Gaunt)

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