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Shilling Trades Firm Supported By Central Bank Open Market Operations

The local currency held firm supported by the Central Bank open market operations that creamed off excess liquidity creating a stable short term outlook during the week ending August21, 2020.

 On the supply side improved inflows mainly from tea and coffee added to the stability stance. The shilling traded at 3675/85 on the bid and ask.

In the fixed income space, there was no primary market activity in the absence of the bi monthly auction.

In the regional currency markets, it was a volatile week for the Kenyan currency. The unit hit an all time low on account of increased importer demand, to trade at 108.50/70. Towards the end of the week, the currency recovered on the back of slowing demand.

The global markets saw the US dollar consolidate its gains after less dovish than expected US Federal Reserve policy committee minutes prompted bears to buy into a heavily shorted currency fueling its biggest surge in more than two months. The market trend did not spare the Euro and Sterling,both touching weekly lows against the greenback.

In other segments of the markets, the bearishness spilled over, with Oil and Wall Street knocked off their recent gains.

“Outlook for the shilling suggest a good measure of forward visibility, inflows are expected to slightly improve on account of end month conversions,” says Stephen Kaboyo, an analyst and Managing Director at Alpha Capital Partners.

He adds: “Furthermore, the currency is poised to benefit from a positive sentiment as the bleak fiscal backdrop is somewhat improving with the July revenue collections exceeding the monthly target fueling optimism that economic activity is slowly picking up.”

Taddewo William Senyonyi
https://www.facebook.com/senyonyi.taddewo
William is a seasoned business and finance journalist. He is also an agripreneur and a coffee enthusiast.

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