The central bank of Kenya continues to do away with the excess liquidity in the market even as the shilling became weak against the dollar for the seventh straight day on Friday.
According to data from CBK, 107.24 shilling units were up against the dollar on the Friday opening in contrast to the 106.20 shilling units on the previous Friday. The Friday opening has dropped the shilling by 4.7 percent in value since the first reported case of coronavirus in the country on March 12. The shilling was exchanged at 102.42 against the dollar back then.
However, traders have said CBK was in the market on Friday to mop up to Sh 20 billion through the 7 and 14-day repos in an attempt to rescue the shilling.
The official operational foreign exchange reserves had shed about Sh 60.99 billion to $7.85 billion by April 23 from $8.42 on March 13. CBK has added billions to support the shilling, which could explain the drop in dollar reserves.
CBK’s aggressive work in the market has, however, raised eyebrows among some analysts who think CBK was creating ”confusion” in the market.
“The CBK recently took some actions to unblock billions for onward lending, yet it is back in the very market mopping up billions,” a statement from a trader.