Shilling firms, high interest rates draw offshore investors

Kenya’s shilling strengthened on Friday, helped by dollar inflows from offshore investors interested in buying government securities.

At 0639 GMT, commercial banks quoted the shilling at 105.10/20 to the dollar, compared with Thursday’s close of 105.55/65. “It’s strengthened on the interest rates. The interbank is very tight. I think the Treasury bill is beginning to attract offshore interest now, so the market is seeing some flows,” said a senior trader at one commercial bank. “It’s basically the offshore (investors) chasing the Treasury bills and such.”

 On Thursday, the weighted average yield on 91-day Treasury bills jumped to 18.607 percent from 14.486 percent at last week’s sale, the central bank said. The yield on a one-year bond also on sale rose to 19.062 percent from 16.432 percent at the last sale in 2012. The weighted average interbank lending rate eased slightly to 25.6398 percent on Thursday from 25.7934 percent on Wednesday.