By REUTERS
The shilling weakened to more than 100 to the dollar on Monday for the first time in more than 3-1/2 years, hurt by global demand for the US currency and worries about the Kenyan current account deficit.
Traders also said they were awaiting Tuesday’s Central Bank Monetary Policy Committee meeting, expected to keep the benchmark lending rate on hold after hiking it to 10 per cent from 8.5 per cent last month.
By the 1300 GMT close, the shilling was at 100.10/20, compared with Friday’s 99.70/80 finish. It is now at its weakest level since October 2011.
“It’s a big deal and it opens room for more depreciation,” said one senior trader.
The main driver for Monday’s shilling move was the climb on global markets in the dollar, which rose after Greeks voted against bailout conditions demanded by their creditors.
“Greece has created global dollar strength and that (was) reflected locally,” said the trader, noting Kenya’s rising trade imbalance was also continuing to weigh.
The Kenya National Bureau of Statistics said on Friday the current account deficit widened to Sh101.5 billion in the first quarter of this year from 63.8 billion in first quarter of 2014.
On the Nairobi Securities Exchange, the main NSE-20 Share Index was almost unchanged, closing up a marginal 1.55 points at 4,814.11 points.
On the secondary market, government bonds valued at Sh444 million ($4.4 million) were traded, compared with 250 million in the previous session.
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