This archive report was first published on 4 September 2019.
On September 4, 2019, the Kenyan shilling faced pressure from excess liquidity in the market and high demand for hard currency, leading to a slight decline against the US dollar.
Commercial banks quoted the shilling at an average of 103.85 units to the greenback in afternoon trades, compared to the previous day's closing rate of 103.82 units.
Dealers attributed the elevated liquidity to government payments, while importer demand for dollars weighed heavily on the currency.
As a result, the Central Bank of Kenya intervened by taking out Sh15 billion in repurchase agreements from investor bids worth Sh20.35 billion.
The shilling has been oscillating between the 103 and 104 level against the dollar in recent weeks, with a brief foray into the 102 level two weeks prior.
A weakening shilling raises concerns about a higher cost of living due to the country's dependence on imports, which are paid for in dollars.
However, this also presents an advantage to exporters, who can earn more when they make sales in dollars that are then converted to shillings upon repatriation.
