Wednesday, June 4, 2014
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(Reuters) - Kenya's shilling strengthened modestly on Wednesday, boosted by central bank intervention to support the currency.By 0942 GMT, the shilling was trading at 87.40/50 to the dollar, compared with Tuesday's close of 87.50/70. The currency has lost about 1.7 percent of its value since the start of the year. It fell to around 88 to the dollar last month.
The Central Bank of Kenya has been regularly mopping up shilling liquidity in recent weeks, mainly through issuing repurchase agreements.
It has also offered dollars, with the Business Daily newspaper saying it had sold $73 million when the shilling weakened steeply on May 23.
The Business Daily figure could not be confirmed, but traders say the bank has been selling an unspecified quantity of dollars in the past two weeks.
"It shows their determination to continue intervening," said Joshua Anene of Commercial Bank of Africa. "That's the most important thing."
A series of bombings blamed on Somali-linked Islamists in the capital Nairobi and along the coast has rattled investors who worry about the damage to the tourism indusry, a major source of hard currency. Many hotels say bookings have fallen.
The central bank sought to mop up 10 billion shillings of excess liquidity on Wednesday, after saying it wanted to mop up 15 billion shillings on Tuesday.
"This is just a short term (boost)," Anene said of the latest firming of the currency. "Mid-term the shilling should weaken or should start weakening."