Shilling under pressure over import demand

Heavy demand for US Dollars from importers caused the shilling to weaken on Wednesday’s morning trading session to 1610/- levels.

However, according to National Microfinance Bank (NMB) e-market report, the shilling strengthened on natural inflows and market correction to close at 1590/1595.

MOUNTING demand for the shilling from importers and interbank fronts made the shilling trading session to remain under pressure for the three consecutive days this week.

“A stable day for the shilling albeit it seems delicately poised to surge upwards as overpowering corporate demand Shilling under pressure over import demand is being serviced by a market deficient of dollars,” stated the report.

According to the Standard Chartered Bank Daily Market Commentary, aggressive BoT interventions to sell US dollars may be a possible scenario that will give further strength to the shilling.

The bank report show further that the shilling continued to remain under pressure from the resurgence of demand on corporate and interbank fronts.

“This bout of weakness of the shilling may continue until month end shilling tightness resumes. During month end corporate turns focus from dollar buying to gathering shillings for tax payments. This usually tends to reduce the dollar demand pressure in the market, albeit temporarily,” stated the report.

The BoT noted in its recent report the need of having a close eye on the performance of the shilling to strike the balance between exports, imports and other sectors like tourism whose role in the economic is indispensable.
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