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Shilling bows to imports pressure

Zachary Ochuodho @zachuodho

The Kenya shilling yesterday weakened against the US dollar for the third time in less than a month in what most traders attributed to dollar demand by the energy and manufacturing input importers to meet their end-of-month obligations.

By 8.00 am, when banks opened their door for business, the shilling was trading at Sh102.15/35 against the dollar, compared with Sh102.05/25 as at close of business Wednesday. The Central Bank mean exchange rate was Sh102.17 to the dollar.

Last week, the shilling depreciated by 0.3 per cent against the dollar to close at Sh101.9 from Sh101.5 during the previous week.

Analysts attributed the weakening to the move by CBK to denominate old Sh1,000 currency notes – a move which CBK Governor Patrick Njoroge dismissed as inconsequential.

Njoroge said the slide was not related to the performance of the shilling. He said foreign exchange reserves had risen to $10.1 billion (equivalent to 6.4 months of import cover), and continue to provide adequate cover and a buffer against short-term shocks in the foreign exchange market.

Njoroge said foreign exchange increased cumulatively by 6.1 per cent in April to $991.2 million (Sh101.3 billion) from US$858.6 million (Sh87.8 billion) recorded in a similar period of review in 2018.

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