Shilling loses exchange battle

The shilling today continued to post losses against the greenback on the back of surged demand for dollars from importers with relatively weak supply.

Since Monday, the shilling lost battle to regain its primacy it gain for the last weeks where it refuses to go below the 1,600/- mark against the US dollar.

Today, the market closed at 1,596/1,606 after breaching a1, 600/- resistance last Friday.

“The local currency continued to post losses against the greenback…on the back of continued demand for dollars from importers…,” National Microfinance Bank (NMB) says today.

Standard Chartered Bank says “shilling traded with some volatility yesterday as we saw a slight upward tick in the exchange rate… (follows) some demand in the interbank market”.

The market, according to Standard Chartered Bank, interest return to bond markets following overnight rates moving down and the liquidity increases.

“…We have seen some interest return to the bond markets. The five, seven and ten years bond, saw some interest on buying with yields moving down by 300 basic points (bps) as sellers anticipate the decline of the curve,” the bank says.
Off recently, five and seven years debt securities have been oversubscribed heavily due to its high yield rates that are put to offset high inflation related risks.

In the last bond market the seven-year T-bond was oversubscribed four times after investors tendered 104.35bn/-. The central bank offered 25bn/- only. The bond had a price tag of 10.08 per cent.

Debt markets expects are predicting that even the today’s auction for 10 years government bond would be oversubscribed heavily mainly by pension funds. The bond has 11.44 coupon rates and expects to have 16 per cent yield rate.

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