Kenya shilling declines 1.1 pct in H1

Source: Xinhua| 2017-07-05 17:38:21|Editor: Yang Yi
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NAIROBI, July 5 (Xinhua) -- The Kenya shilling depreciated 1.1 percent against the U.S. dollar in the first half of 2017 to close at 103.7 at the end of June.

The drop was mainly due to heightened dollar demand from importers as the shilling had ended 2016 at 102.5.

The shilling remains under pressure currently, dropping against the dollar and world major currencies like the British Pound.

On Wednesday, the apex bank quoted the currency at 103.81 to the dollar in early morning trading, which was a slight drop from Tuesday's level.

The shilling had on Tuesday dropped 0.09 percent to stand 103.80 against the dollar and having fallen to 103.78 on Monday.

The Central Bank of Kenya has responded by selling large volumes of dollars in its foreign exchange reserves in bid to stem the fall.

Last week, the bank sold dollars worth 141 million to buttress the shilling, with the forex reserves falling from 8.11 billion dollars or 5.36 months of import cover or 7.96 billion dollars or 5.26 months of import cover.

Analysts, however, noted that the shilling would remain relatively stable in the short term despite the turbulence, supported by high forex reserve level and declining global oil prices given that Kenya is net oil importer.

Besides, Kenya has a precautionary credit facility of 1.5 billion dollars from the IMF which it can utilize to stabilize the shilling and there is increased diaspora remittances that grew by 6.2 percent to 433 million dollar in quarter one.