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Central Bank Injects Sh13 Billion Into Money Market

August 7, 2014


Kenya's central bank stepped into the market yesterday to inject Sh13 billion after a liquidity squeeze sent overnight lending rates higher.

The weighted average interbank lending rate rose to 10.7589 per cent on Tuesday from 10.5181 per cent on Monday.

The bank also used reverse repurchase (repo) agreements to inject Sh8 billion on Tuesday.

The shilling eased slightly, taking cue from central bank's Tuesday action of injecting local currency into the market. banks from holding dollars. At 10.57 a.m commercial banks quoted the shilling at 87.80/88.00 to the dollar, compared with Tuesday's close of 87.85/95.

"We have weakened slightly from yesterday after the CBK came in to pump in shillings in the market," Sheikh Mehran, head of trading at I&M Bank, said. Mehran said the shilling could be capped from weakening past 88 due to dollar inflows from foreign investors buying stocks on the Nairobi Securities Exchange.

"We predict that this level will hold quite strongly at 88. There is increased foreign participation at the NSE which is likely to give the shilling a boost," he said. Traders forecast the shilling to trade in the 87.50 to 88.00 range in coming days.

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Source: AllAfrica

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