April 13, 2012 / 9:19 AM / in 6 years

Kenya cbank seeks to mop up $78 mln via repos

NAIROBI, April 13 (Reuters) - Kenya’s central bank sought to mop up 6.5 billion shillings ($78 million) through repurchase agreements, for the fifth straight session on Friday, to take out excess liquidity in the market and see off downside risks to the currency.

The weighted average interbank lending rate plunged by 11 percentage points over three sessions to a low of 10.3 percent on April 5 weighed down by improved liquidity after the government paid its bills and investors redeemed matured Treasury securities.

Good liquidity means market participants can easily fund long dollar positions, weakening the shilling against the dollar.

But the central bank has soaked up a total of 24.6 billion shillings in repos since last Thursday, helping to push up the overnight rate to 13.5 percent and closer to the policy rate, which stands at 18 percent. ($1 = 83.3750 Kenyan shillings) (Reporting by Kevin Mwanza; Editing by Duncan Miriri)

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