After a string of losses in last couple of weeks, the local currency took a breather. The shilling stabilized, trading in a narrow range of 3785/3795 . Demand remained subdued amid tight liquidity conditions.
As part of its open market operations, the Central Bank was in the market mopping up undisclosed amount via a 7 day repurchase agreement a deposit auction.
In the regional currency markets, the Kenya shilling was on the back foot as inflows from tourism and remittances dried up. The shilling was expected to remain under pressure in the coming weeks. Trading was in the range of 105.75/95.
In the global markets, the US dollar edged up towards a 2% weekly rise boosted by a surge in oil prices as investors sought safety amid worsening global economic fallout. With the COVID 19 worsening in US, weekly jobless claims doubled in a pace of a week to hit 6.6 million, a number never seen in the US labor market.
“Forecast for the shilling indicate, a bit of stabilization, that is likely to be short lived , given that general market conditions and macro backdrop remain shaky on the broader outlook. Pessimism will keep the dollar firmer against all world currencies for some time to come,” says Stephen Kaboyo, an analyst and Managing Director at Alpha Capital Partners.