Shilling Strengthens Against US Dollar

By Godfrey Tung'wet Posted 04 July 2006 @ 11:36 am EET     Print     Reprint     E-Mail     Comments

Nairobi (IBTimes.com) - The Kenyan shilling on Monday strengthened marginally against the dollar in the opening of markets.

Commercial banks posted the local unit at between Sh73.65 and Sh73.75 to the dollar from last week’s range of between Sh73.80 and Sh73.90 at the close of markets.

Robert Aloo, a dealer at the NIC Bank, attributed strengthening of the shilling to increased inflow of dollars from agricultural exports and non-governmental organisations.

"People are selling some of these dollars in the market. The local unit will stabilise when the demand for the shilling wanes," he said.

Dealers expect inflows of dollars from tea exports to fall in the next two months.

"I expect the shilling to consolidate its position. I see it range between Sh73.50 and Sh74.00," Jeremiah Kendagor, head of foreign exchange at the Kenya Commercial Bank, said.

Players in the tea industry have warned that output in 2006 may fall by between 10 and 16 per cent due to unfavourable weather.

Tea Board of Kenya announced last week that the overall production in 2006 was expected to reduce by 16 per cent. This means the production would drop down to 276 million kg from 328 million kg in 2005.

The shilling recorded mixed performance during the week ending June 29. It lost 81 cents against the dollar to exchange at an average of Sh74.26 to the dollar compared to the previous week’s average of Sh73.66.

It gained 32 cents against the euro to exchange at an average of Sh93.29 cents from the previous week’s average of Sh92.99.

According to the Central Bank, performance of the shilling in the local foreign exchange market reflected the performance of the hard currencies in the international currency markets, where the dollar and euro gained marginally against the Japanese Yen and sterling pound.