Kenyan shilling VS US dollar[PHOTO/eastafrica-news.com]Weak demand for dollars coupled with strong foreign investors inflows into the local debt market yesterday contributed substantially to the strengthening of the shilling.
Commercial banks exchanged the shilling at 102.30/40 per dollar which was the highest appreciation noted since January last year. On Tuesday, the shilling exchanged at 102.40/50 to the dollar.
Standard Chartered Bank Chief Economist, Raza Khan predicts that the shilling will continue to appreciate mainly due to the favorable conditions in the country. She said the recent action by US government to allow direct flight by Kenya Airways to New York will boost tourism and even trade thereafter including dollars.
However, Cytonn Investment Management Plc says the country’s balance of payment position which continues to worsen with the current account deficit on the back of higher global oil prices present a different scenario.
“Despite the weak fundamentals, Central Bank of Kenya (CBK) has managed to support the shilling. We expect the currency to remain relatively stable against the dollar, supported by the CBK activity,” said Maurice Oduor, Cytonn’s Investments manager.