The Kenyan shilling was stable on Friday due to subsiding end month dollar demand from the energy sector and tightening liquidity in the local money market, traders said.
At 0904 GMT, commercial banks quoted the shilling at 103.75/95 per dollar, the same as Thursday’s close.
According to Professor Gerrishon Ikiara, a policy analyst and economics lecturer at the University of Nairobi, the demonetarization triggered speculative activity in the currency market but the traders appear to have made their exit.
“There is an expectation that the Kenya Shilling will remain stable in the short term, relative to other East African currencies. While the ongoing demonetization process could have led to the shilling falling to Sh 104 level to the US dollar, speculators appear to have made their exit from the market,” says Professor Gerrishon Ikiara.
“It is a worldwide practice to allow a currency to oscillate within the 2-5 per cent range, up or depreciate and thus what is happening to the shilling is not of serious concern at the moment. With the present able leadership from monetary authorities and increased diaspora inflows, the shilling should remain stable within the 102-103 range,” adds Mr Ikiara.
The central bank of Kenya on 1st June 2019 announced the demonetizing 217.6 million pieces of the KSh1,000 old series notes which will cease being legal tender on the 1st of October 2019.
Related; CBK heightens anti-money laundering checks as the deadline for converting old 1,000 notes nears
