Shilling on the back foot against dollar
Jun 19, 2011
THE shilling was on the back foot throughout last week against the dollar, testing a record low of 2445/50 on Friday compared to the previous close of 2400/05.
THE shilling was on the back foot throughout last week against the dollar, testing a record low of 2445/50 on Friday compared to the previous close of 2400/05.
All this happened despite the Central Bank selling $20m on Wednesday in the market focusing on supporting the shilling with no success, dealers said over the weekend. Demand for dollars continued to surge from corporates mainly telecommunication and energy sectors with sizeable flows from yield hunters which were not enough, Denis Mushabe, a forex trader at Standard Chartered Bank, said.
“Also, the general risk aversion in the global markets seem to have taken toll on most emerging markets resulting into a strong dollar against the basket of regional currencies with the Kenya shilling leading the way testing a record low of 90.95 against the dollar.
“Yields on treasuries continued to rise with the one-year paper going at 13.51% compared to 12.71% in the previous auction,†Mushabe said.
He said this week, the shilling is expected to remain weak “though market players will be watching the Central Bank closely as the governor indicated he will take action in case of a further drop.†“Expected trading range is 2420-60.
In the debt market, the Central Bank is issuing a two-year paper mid-week and the market expects a jump in yields of about 150-basis points from the previous 12.75%.â€
All this happened despite the Central Bank selling $20m on Wednesday in the market focusing on supporting the shilling with no success, dealers said over the weekend. Demand for dollars continued to surge from corporates mainly telecommunication and energy sectors with sizeable flows from yield hunters which were not enough, Denis Mushabe, a forex trader at Standard Chartered Bank, said.
“Also, the general risk aversion in the global markets seem to have taken toll on most emerging markets resulting into a strong dollar against the basket of regional currencies with the Kenya shilling leading the way testing a record low of 90.95 against the dollar.
“Yields on treasuries continued to rise with the one-year paper going at 13.51% compared to 12.71% in the previous auction,†Mushabe said.
He said this week, the shilling is expected to remain weak “though market players will be watching the Central Bank closely as the governor indicated he will take action in case of a further drop.†“Expected trading range is 2420-60.
In the debt market, the Central Bank is issuing a two-year paper mid-week and the market expects a jump in yields of about 150-basis points from the previous 12.75%.â€