The Kenyan Shilling staged a slightly strong week-to-week gain against the US Dollar, and the trend is likely to remain steady for a few more days before strengthening further, analysts said.
Kenya’s currency strengthened by a small 1.0 per cent against the world’s primary reserve currency at 128.50/129.50 per US Dollar, compared with 128.25/129.25 at last Thursday’s markets close as traders reversed bets on the growing demand of the USD in the petrodollar system.
“We are seeing some increased dollar demand from oils and corporates, but, generally, we are stuck within a range. It is likely to stay that way for the next few days,” one expert told Reuters.
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“We are stuck within this range. The Shilling has reached a stable zone,” another said.
More specifically, experts forecast the Shilling to Dollar rate may remain trapped around 128 because of the rising demand for the US currency by other manufacturers and importers outside of greenback-denominated markets as well, plus the impact of key American political events, which have been prospected to weaken the outlook for the US Dollar.
The fixings have been set at firmer-than-expected levels, though, despite the country’s downgrade from B3 to a lower Caa1 category in Moody’s credit ratings, which indicates a possibility that many financial obligations issued in Kenyan shillings will not be honoured as promised.
With the above delicate aspects of the forex market, the Central Bank of Kenya (CBK) said the sustained appreciation of the Shilling was largely influenced by the oversubscription of the infrastructure bonds in February.
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