Shilling to remain unsteady as ‘Hague debate’ rages

By Morris Aron and Reuters

The shilling will come under undue pressure in the coming weeks as political risk responds to the heightened debate on whether post-election violence perpetrators should be tried locally or at The Hague.

For the second day in a row, the local unit yesterday registered swings against the dollar initially strengthening then losing some ground on stock trading — that is, the selling of stocks to cash is on a sharp rise.

"We went as high as Sh77.55/65 before we saw profit taking. The range formed for now is Sh77.00-Sh77.50," said Friday Mwafuga, head of trading at Cooperative Bank.

"The only way is downward but Sh77.00 is proving a very strong support."Currency exchange rate oscillations have been noted since the announcement that the former UN-Secretary General — who mediated during Kenya’s post election crisis — had handed over the names of those behind post election violence to the International Criminal Court.

Yesterday morning, commercial banks traded the local unit at Sh77.15 to Sh77.25 to the dollar, compared with Monday’s closing level of Sh77.40 to Sh77.50.

A burst of dollar demand on Monday sent the shilling spiralling to a low of Sh77.70 per greenback in what analysts said was due to increased political risk and uncertainity.

Parliament recently blocked attempts by the executive to establish a special local tribunal to try those behind the violence.

 

 

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