CBK seeks to mop up liquidity, shilling slips
What you need to know:
Pressure on the shilling has also mounted following increased dollar demand from manufacturers and energy importers buying the greenback to satisfy end month import orders.
The Central Bank Monday sought to buy shillings from the market by selling dollars as demand for greenback soared on heightened demand.
CBK is reported to have sought to mop up Sh12 billion from the market but it is not yet clear how much was offered.
Traders said increased end month demand for dollars from importers was weighing down the currency.
On Monday Greeks woke up to shuttered banks and cash machines over a breakdown in talks with their creditors, reflecting a deepening crisis.
Commercial banks quoted the shilling at 98.55/98.65 in the morning trading sessions, weaker than 98.35/98.45 at which it closed trading on Friday.
“The weakness was as a consequence of the weakness in the Euro, which has come under pressure from dollar strength over the Greece debt crisis,” said an analyst at a commercial bank.
MANUFACTURERS
Pressure on the shilling has also mounted following increased dollar demand from manufacturers and energy importers buying the greenback to satisfy end month import orders.
The shilling has come under pressure this year due to a growing current account deficit over slowdown in forex inflows and growing import pressure.
Insecurity perpetuated by the Al Shabaab has also hit the tourism sector hard, keeping away tourists. As a consequence, forex inflows from tourism, one of the largest foreign exchange earners, have declined.
At the close of trading on Friday, the shilling registered a marginal gain to the dollar aided by tight liquidity and reduced dollar demand in the market.
