Shilling nears 100-mark ahead of Central Bank of Kenya meeting

The shilling weakened last week as dollar demand increased, sinking to a level not seen since November 2011, while expectations of dollars sales by the Central Bank of Kenya failed to materialise.

At the close of trade on Friday, commercial banks posted the shilling at Sh99.70/80 to the dollar, closer to the psychological 100-mark. The currency had closed at 99.50/60 on Thursday.

“We thought that when it hit 99.50, the central bank would protect it. It didn’t. So now, if we see some more [dollar] demand, it could touch 100,” said a trader at a major commercial bank in Kenya.

Traders said the central bank, which pumps dollars into the market whenever the shilling depreciates too rapidly, would not want the shilling to drop to 100. Some market players were taking a “wait and see” approach ahead of tomorrow’s Monetary Policy Committee meeting, the trader said.