Shilling steady after Central Bank rate hike

The shilling was stable against the dollar on Wednesday, a day after the Central Bank hiked rates by a higher-than-expected 1.5 percentage points to 10 per cent to support the weakening local currency.

At 0825 GMT, the shilling was trading at 97.10/30 to the dollar, compared with 97.15/25 at Tuesday’s close. A trader at one commercial bank said the shilling strengthened in early trade to 96.75/85 but retreated after banks who were short on dollars started closing their positions.

“Some guys were short on dollars yesterday because we touched the 98 level,” he said.

In a Reuters poll of 12 analysts, most forecast a rise of 100 basis points, while two predicted a lower hike. None expected such a big increase.