Central Bank of Kenya uses $ 300M to save KShs vs Bullish USD

Kop

Senior Member
Oct 17, 2012
177
500
Benki Kuu ya Kenya imetumia zaidi ya USD 300M kuitetea shilling ya Kenya dhidi ya "Bullish Dollar", IMF yaonya huenda thamani ya shilling ya Kenya inaamuliwa na serikali badala ya nguvu ya soko. Kama hukukimbia umande soma hapa zaidi

The Central Bank of Kenya has burned through more than $300 million in the last one month trying to protect the shilling against a bullish dollar, with analysts predicting that it could hit 105 units to the dollar by the year's end.
The Bank engages in periodic interventions, to limit the shilling's movement, and this has so far seen the country’s foreign currency reserve dropping to $8.15 billion as at the end of last week, from $8.45 billion at the start of October, and was expected to drop further at the close of business on Friday following the pressure the shilling has faced this past week.
Pressure
Last Thursday, the shilling weakened to a near 10-month low due to importer demand, especially from oil companies. Commercial banks quoted the shilling at 103.05/25 in early trade, a level last seen mid-January this year, when it traded at 103.15/25, according to data from Refinitiv.
“There is excess shilling liquidity in the market so banks can afford to buy dollars. Also, there is demand from importers bringing in goods ahead of the festive season,” a senior trader from one of the Tier One commercial banks said.
Kenya has in the nine months to September this year seen its import bill rise to $13 billion, against $4.71 billion in export earnings, data released a fortnight ago by the Kenya National Bureau of Statistics shows. Last Thursday, Global ratings firm Fitch Solutions, in a report, predicted challenges ahead for the growth outlook and higher inflation.
“We forecast the shilling to weaken to 103.5 against the dollar by end of 2018, down from 100.9 at the time of writing this report,” Fitch Solutions said in its report on the regional currencies.
In the past one month, the shilling has already depreciated by 1.35 per cent with Renaissance Capital estimating the value will drop further to 105 against the dollar as the year closes.
Last month, the International Monetary Fund (IMF) in its staff review indicated that the Kenyan currency may be overvalued by up to 17.5 per cent adding that it risked being classified as managed rather than operating on the forces of demand and supply.
This latest pressure on the shilling comes at a bad time. It means the government will have to spend more to pay its debts, and especially those due at the end of the month, if the dollar pressure is sustained. This is because with every percentage devaluation, the size of the country’s external debt grows.
National Treasury Cabinet Secretary Henry Rotich would want to be keen to see a stable shilling, as it has remained in the past 27 seven months so as to avoid further bumping up of external debt repayments, which are projected at $3.6 billion this financial year ending June 2019. Already a bulk of the country’s external debt obligations are payable in dollars and any movement on the shilling will be costlier in debt repayments.
“As Kenyan authorities have turned to international markets to borrow, their exposure to currency risks have increased. Indeed, almost half of the public sector debt is now denominated in foreign currency,” economists at the London-based research consultancy Capital Economics said early this month.
In September, 30 of the 40 commercial banks polled by the CBK predicted that the shilling will weaken in the 12 months to next August, driven by increased imports, as a result of recovery of the country’s economic activities.

Source: The Eastafrican Newspaper
 

-KANA-

JF-Expert Member
Apr 17, 2017
3,975
2,000
Ile bullish trend ya USD jana ilikua noma. In forex, kuna pair zimetema more than 1500 pips in just a single day.

Sisi ngoja tuweke wajeda kwenye Bureau de change!
 

Nivlark

JF-Expert Member
Jul 19, 2013
380
500
Tanzania: Shilling Falls to Record Low Against the Dollar
allafrica.com Nov 20, 2018 12:53 PM

Dar es Salaam — Tanzanians are spending more on importing goods and services as the shilling continues to depreciate against the dollar.

The shilling plunged to a record low of Sh2,303 to the greenback on Monday. The previous record of Sh2,300 was reached in July 2015 before the Bank of Tanzania (BoT) intervened.

A survey of various bureaux de change in Dar es Salaam established that one US dollar was sold for Sh2,320 yesterday from less than Sh2,300 last week.

The BoT inter-bank foreign exchange market report showed that the shilling fell to the lowest rate of Sh2,303 to the dollar yesterday from Sh2,293 the previous week.

Commercial banks sold one dollar for Sh2,354 yesterday from Sh2,298 recorded at the end of last week. The buying price was more than Sh2,300.

BoT marketing and finance director Alexander Mwinamila said the shilling's standing against the dollar depends on market forces.

"The current depreciation is nothing unusual, and has been partly caused by seasonal factors and a general strengthening of the US dollar across most currencies in the past few days," he said.

Financial experts told The Citizen yesterday that the local currency's depreciation to a record low against the dollar was a result of a slowdown of foreign direct investment inflows, low exports, increased yearend dollar demand and appreciation of the US currency.

"We have seen low FDI inflows, which have resulted in limited dollar inflows. At the same time, there hasn't been a significant increase in our exports," Mr Joseph Nyamonge, financial control manager at Access Bank Tanzania Limited, told The Citizen.

He added that this is the time of the year when demand for foreign currency, particularly the dollar, rises sharply among importers of goods and services.

"As we head towards December, demand for dollars increases as imports surge ahead of Christmas and New Year festivities," Mr Nyamonge said.

The US currency has also appreciated against other major international currencies, he added.

Mr Nyamonge said he expected the trend to continue until next February or March when the shilling will start to stabilise.

The local currency has remained largely stable since January last year, mainly due to the central bank's interventions.

In its monetary policy statement for June this year, BoT said it would continue to implement a floating exchange rate regime through participation in the interbank foreign exchange market for liquidity management purposes and stabilisation of the market in the event of excessive volatility.

Mr Sameer Milo, the managing director of the Dar es Salaam-based FX Bureau de change, said it was difficult to explain the shilling's rapid depreciation in a few days.

"It is obvious that market forces are at play, but this is not enough to explain this rapid depreciation," he said.
 

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