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Kenya shilling strengthens against US dollar on horticulture inflows

NAIROBI (Xinhua) -- The Kenya shilling has appreciated against the U.S. dollar in the past one week boosted by inflows from institutional investors and horticultural produce exporters.

On Monday, the Central Bank of Kenya (CBK) quoted the shilling at 102.6 against the dollar, a high from 103.9 in January.

“The strengthening of the shilling has primarily been driven by dollar inflows from offshore institutional investors and horticultural produce exporters this past week,” Cytonn, a Nairobi-based investment firm said Monday in a weekly update.

According to Cytonn, the Kenya shilling during the period gained 0.8 percent to close at 102.7 on Friday, from 103.6 the previous week. On a year to date basis, the shilling has depreciated against the dollar by 0.2 percent.

Last month, the shilling appreciated against the dollar by 1 percent to close at 102.9 from 103.9 at the end of January.

The appreciating currency has helped to stabilize Kenya’s foreign exchange reserves as the Central Bank does not need to sell dollars to buttress the shilling from falling.

The East African nation’s foreign exchange reserves closed Friday at 7 billion U.S. dollars or an equivalent of 4.6 months of import cover, from 6.9 billion dollars the previous week.

“While this is a drop from a peak of 7.8 billion dollars in October 2016 or equivalent to 5.2 months of import cover, the forex reserve level has now stabilized at 4.6 months of import cover, an indication of the confidence the Central Bank has with the current levels of the shilling,” said Cytonn.



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