The local currency backtracked mid-week pausing the stable stance in the previous sessions. The shilling breached a key level of 3,700 on the sell side as demand surged mainly from importers, retail and energy players. Supply side remained subdued.
The fixed income market segment continued to register significant demand that saw yields remain relatively flat. The auction coincided with the Central Bank decision to relaunch the Primary Dealer system alongside refining the monetary policy operational framework with the introduction of the standing lending facility. The reintroduction of PD is likely to support demand and limit sharp spikes on the curve.
Kenyan shilling weaker
In the regional markets, the Kenya shilling traded at 108.25/45, weaker than the previous week, with market expectations hinged on the Central Bank action to halt the slide. While in Tanzania, the currency was steady on matched demand and supply, trading at 2315/25.
In the global markets, the dollar clung to its gains after a rout in stocks sent nervous investors to its safety, while the sterling was poised for its worst week since March as UK plans to break a divorce treaty with Europe rekindled the spectre of no deal Brexit. The Euro also languished as a result.
Outlook suggest that shilling slide will likely ease as mid-month corporate taxes take center stage.