July 22, 2020 / 12:42 PM / 14 days ago

UPDATE 1-Kenyan shilling hits new record low against the dollar

 (Recasts with record low)
    NAIROBI, July 22 (Reuters) - The Kenyan shilling
dropped to a record low against the dollar on Wednesday, dragged
down by demand for hard currencies from importers resuming
business after the state started to ease coronavirus lockdown
measures.
    Traders said the shilling exchanged at 108.20 per dollar in
the afternoon, lower than its morning level of 107.75/95, and
well below its previous all-time low hit in 2011, which was
first breached in Tuesday's session.
    "The shilling is literally crashing," said a market
participant who did not wish to be named.
    They attributed this to a surge in demand for dollars by
importers after the lockdown measures began to be lifted earlier
this month.
    The government cut curfew hours and allowed movement into
and out of Nairobi and the port city of Mombasa. It also lifted
a ban on international commercial passenger flights from Aug. 1.
    The moves have brought out a bunch of importers seeking to
buy dollars in sizeable chunks for the first time since March,
the market participant said.
    In the meantime, the supply of dollars has been squeezed by
lack of tourists and a reduction in exports of other
commodities, creating a storm for the shilling, traders said.
    The central bank has been selling dollars to banks to calm
the market, which has also been affected by a rise in liquidity.
    The weighted average interest in the overnight borrowing
market has been hovering at about 2% for weeks, indicating a
surge in liquidity, which usually makes it easier for traders to
build up their dollar positions. 
    
               ...........................Shilling spot rates
                  .....................Shilling forward rates
                           .......................Cross rates
         ..................................Local contributors
           .......................Central Bank of Kenya Index
          .....................Kenyan Bonds contributor pages
                          ...............Treasury bill yields
        ..................Central bank open market operations
        .........................Horizontal repo transactions
         ,       ................Daily interbank lending rate
              .............................Kenya Bond pricing
          .................................NSE-20 Share Index
          .................................NSE-25 Share Index
         .................................NSE All Share Index
             ...........................FT NSE Kenya 15 Index
             .......................... FT NSE Kenya 25 Index
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 (Reporting by Duncan Miriir and John Ndiso; Editing by Mark
Heinrich)
  
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