Shilling struggles as pressure mounts

The local currency reached as low as 2,285/- against the US dollar prompting market players to delay trading in forex in the hope that the spike would slow down to lower levels, according to CRDB market highlight report.

However, it eventually settled at 2,255/- against a greenback as market players seemed to be worried on the trend of the local currency and hence stayed away from trading due to high prices of the US dollar.

The long standing mismatch between the demand and supply continues to be the reason behind the local unit’s deprecation against the US dollar index.

Pressure on the currency is expected to adhere for the foreseeable future, due to increasing low US dollar inflows to support the high demand.

Another bank, TIB, said the pair edged north on Monday with US dollar demand from petroleum and manufacturing sector putting pressure on the shilling.

“Further pressure is expected today unless sizable inflows enter the market,” TIB said in the daily market update. Orbit Securities weekly report showed that the shilling weakened 0.19 per cent to close the last week at 2,267/43 a dollar compared to 2,263/18 at the end of preceding week.

Also the volume transacted was marginally lower at 23.1million US dollars compared to previous week’s 23.7 million US dollars. The brokerage firm said “the demand pressure could be resulting from seasonal factors, where the period between March to May the forex demand almost always outstrip supply”. In the second quarter import bill, especially oil is not matched with forex proceeds from commodities export.

Source: Daily News

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