The local currency appreciated slightly against the US dollar on Wednesday, 19 September despite recent fall following the National Treasury decision not to renew the IMF’s US$ 989.8 million or KES 99.81 billion forex insurance programme.
Banks bought the dollar at 100.70 units and sold it for 100.90 in early trade, the highest since the 100.65/85 opening level last Wednesday, 12 September. On average the shilling gained 0.37 per cent on 4 days to Wednesday’s 100.80.
The unit has been recording marginal but steady gains on the dollar since Monday, partly bolstered by foreign investors buying into government securities and the Central Bank of Kenya mopping up excess liquidity.
Traders expect dollar inflows from the diaspora, exports, and Kenyans repatriating cash stashed abroad to outweigh net outflows.
A forex dealer noted,
“We looked at it (last Thursday’s depreciation of the shilling against the dollar) as a knee-jerk reaction by some corporates because it had no direct impact on real demand and supply in the market. It had no depth it couldn’t run for very long.”