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Shilling Remains Volatile Ahead Of BoU’s Monetary Policy Meeting

The local currency hit pockets of volatility in early trade but price action became less intense towards the end of week as demand subsided. Mid month tax payments did little to support the unit. Trading was in the range of 3700/3710 during the week ending October15, 2020.

In the fixed income space, trading was limited to the secondary market as there was no schedule primary market auction.

The regional markets saw the Kenya shilling maintain a stable stance, firming slightly and clinging on early week gains on matched demand and supply conditions. The unit quoted at 108.45/65.

In the global markets, the US dollar inched higher while Wall Street slipped, as investors locked in recent gains amid rising concerns about the resurgence of Covid19.
Markets also reacted to the downbeat comments from the US treasury, that a stimulus deal was unlikely before Nov 3 vote, this led to a profit taking drive.

In commodities markets , oil prices strengthened as OPEC and its allies were seen complying with a pact to cut oil supply even as concerns loomed that recovery in fuel demand will likely stall on account of soaring global COVID infections. Brent crude traded at USD43.39 a barrel.

“Outlook for the shilling indicate that the unit will retain a firm stance ahead of the Monetary Policy meeting, an event that will keep trading on the cautious side,” says Stephen Kaboyo, an analyst and Managing Director at Alpha Capital Partners.

He adds: “Overall BOU is likely to maintain a loose monetary policy stance as growth concerns are expected to dominate policy debates.”

Taddewo William Senyonyi
William is a seasoned business and finance journalist. He is also an agripreneur and a coffee enthusiast.

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