Kenya shilling holds steady vs dollar, seen stronger

Offshore dollar inflows into high yielding government securities are seen boosting the Kenyan shilling in the coming days, traders said, as the currency held steady in lacklustre trade on Monday. Demand for government paper across east Africa has jumped due to the high yields offered by authorities trying to quell inflation and support currencies. Commercial banks are also hedging against loan defaults due to the rise in lending rates.At 0733 GMT, banks quoted the shilling at 83.70/90 against the dollar, barely changed from Friday’s close of 83.80/90. “It’s still biased for a stronger shilling going forwards. We’re are seeing good inflows from foreign buyers into bonds because of the high yields,” said Julius Kiriinya, a trader at African Banking Corporation. Traders said they expected the shilling to trade in the 83.00-84.50 range this week.The Central Bank of Kenya held its key rate at 18 percent for a second straight month in February, disregarding a marginal fall in inflation over the last two months to 18.31 percent in January. “With the overall aggregate demand in the economy being depressed due to the current high cost of accessing credit, the shilling could strengthen further in the days to come as supply overwhelms demand for the greenback,” said Bank of Africa in a daily report.

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Kenya shilling holds steady vs dollar, seen stronger