The shilling weakened slightly with some pockets of demand mainly from importers. The temporary deviation did not hold for long, and the unit drifted to sideways trading with bid and ask at 3730/40.
In the fixed income market, Treasury bill yields were flat with the yield of the benchmark 91 day paper holding at 10.002% while the 182 and 364 day printing at 10.249% and 12.500%. In analyzing the bidding pattern it is clear that investors are unwilling to lower their rate expectations and continue to forecast high rates in the wake of weak fiscal situation.
In the global markets, the US dollar tumbled to a one year low against a basket of currencies, while the euro hit a one year peak as traders ramped up expectations of an imminent end to the US Federal Reserve rate hike cycle on signs of cooling inflation.
Looking ahead, the shilling is entering a short period of strength and mild advances mainly due to mid month tax payments that will put a temporary freeze on demand.
In the other news, Kenya’s foreign exchange reserves declined 9.42 billion shillings (about 70 million U.S. dollars) this week, piling pressure on the shilling that similarly fell to a new low, the Central Bank of Kenya said in its update of the financial markets released Friday evening.
The reserves stood at 6.38 billion dollars at the end of the week, an equivalent of 3.56 months of import cover, according to the apex bank.
This was a decline from 6.45 billion dollars or 3.60 months of import cover the previous week. The shilling closed Friday at 135 against the dollar, the lowest rate ever. The bank, however, said the foreign exchange reserves remain adequate.
Alpha Capital Forex Bureau: For competitive Forex Rates VISIT Plot 12 KAMPALA ROAD-CHAM TOWERS SUITE 43: call:
