Kenyan shilling firms against dollar, still seen vulnerable

The Kenyan shilling gained against the dollar on Friday but was seen vulnerable from the side-effects of a global rout of emerging market currencies. Shares fell. At the close of trade, commercial banks posted the shilling at 103.20/30 per dollar, firmer than Thursday’s close of 103.45/55 per dollar.

Joshua Anene, a trader at Commercial Bank of Africa, said the shilling gained after banks squared their dollar positions before the weekend. A firmer dollar and the accompanying flight to safety by investors could however still weigh on the currency.

“The shilling still looks vulnerable,” Anene said. “Interbank players were squaring off ahead of the weekend as no one wants to go to into the weekend with open positions.”

Traders say the shilling, down 12 percent to the dollar this year, was expected to remain under pressure, hurt by a wide current account deficit and scarce tourism receipts due to lower visitor numbers following a spate of attacks by Somali Islamists.

In the stock market, the benchmark NSE-20 share index fell 0.55 percent to close at 4,405.29 points. Shares have been under pressure in recent months due to investor flight to less risky assets ahead of an expected hike of US rates by the Federal Reserve. In the debt market, bonds worth Sh131 million were traded, down from the previous day’s volume of Sh400 million.