The shilling powered to its firmest in the last full trading week of year, trading below 3650, building on its recent gains as market flows increased against subdued demand.
In the fixed income market, yields rose across all tenors in the treasury bill auction. The neutral policy stance announced earlier in the week also gave boost to the currency with search for yield carry traders showing renewed interest in the local fixed income space. However the stretched state of public finances remains a top concern for market players.
In the regional markets, Kenya shilling was stable against the dollar amid slow market activity as companies started closing down for the festive season, trading at 111.50/70.
In the global markets, the dollar took a breather after ending a week long beating that had pushed it below major support level with investors skimming some profits from the big moves that had sent the greenback to a nine month low. While in Britain, the sterling was on course for a weekly gain , its best weekly rise in six months fuelled by hopes of Brexit trade deal breakthrough before end of year.
“In the last two weeks of the year, the shilling is expected to continue its appreciation rally in light end year trade, as markets slow down for the festive season,” says Stephen Kaboyo, an analyst and Managing Director at Alpha Capital Partners.
