This archive report was first published on 1 August 2019.
On August 1, 2019, the Kenyan shilling experienced a significant boost after the Central Bank of Kenya intervened in the foreign exchange market.
The central bank's move to sell dollars to commercial banks helped to strengthen the shilling, which had been experiencing persistent weakness in the local currency.
At 12:30 pm local time, commercial banks quoted the shilling at Sh103.60/80 per dollar, up from 104.15 when the central bank intervened earlier in the session.
The shilling had slid more than 1 percent in seven straight trading sessions, and its value had sunk to its lowest level against the dollar in nearly five years due to heightened political risk, a firmer dollar, concerns about export earnings, and excess liquidity in the money markets.
According to a trader at one commercial bank, the Central Bank of Kenya's intervention was a key factor in the shilling's strengthening, as they 'sold dollars' to stabilize the market.
The central bank also sought to mop up 15 billion shillings from the market through seven-day repos, and the weighted average interest rate on the overnight borrowing market for banks had hovered around 2 percent last month, making it cheaper for banks to bet against the currency by buying up dollars.
