Kenyan shilling coins.[ photo / Citizen digital. ]
The Kenyan shilling on Wednesday gained strength as it sold at 103.15/35 to the dollar compared to 103.25/45 it was selling at on Monday before markets closed down for an inauguration holiday on Tuesday.
Traders said on Wednesday that the inauguration ceremony, which saw President Uhuru Kenyatta sworn in for the second term on Tuesday, helped to bring back the foreign investors’ confidence to the Kenyan market as the long electioneering period clouds slowly vanquished.
“We are looking at positive political development. People who had previously piled on the dollar are unwinding,” said a trader at one commercial bank. We’ve also seen increased demand from foreign investors ," a trader is quoted by Business daily.
Kenyan shilling has this year been relatively stable with the last two months being worst hit due to the high political tensions that had ensued after the NASA presidential candidate Raila Odinga challenged President Uhuru Kenyatta's win in a hotly contested voting exercise.
The decision by supreme court nullify the August 8th presidential election on September 1st saw the shilling tumble as the investors kept off the market waiting for the way forward.
Some investors were even forced to seek safety in dollars and bonds.
The Central Bank of Kenya was later compelled to intervene into the market at several occasions to mop up the liquidity and sometimes sell dollars to commercial banks as a bid to cushion the shilling from volatility.
CBK's latest intervention came on Monday where it mopped up Sh 15 billion from the money market so as to correct what it termed as skewed liquidity.
CBK however stayed out of the money market on Wednesday leaving the shilling to gain full strength as business slowly came normalcy despite traders fearing the possibility of instability in shilling strength due to the approaching holiday season.
“During holidays we get a bit of volatility because of low activity, but this year could be different due to the politics,” added the trader as quoted by Business Daily.