Kenyan shilling flat as interbank trading stabilises market

NAIROBI (Reuters) – The Kenyan shilling traded flat against the dollar on Thursday, as the long-dormant interbank market picked up steam, helping to meet foreign exchange demand, traders said.

At 0943 GMT, commercial banks quoted the shilling at 132.25/45, the same as Wednesday’s close.

Refinitiv data shows the shilling has lost 6.7% of its value against the dollar this year.

Last week, President William Ruto said the government was working with the central bank to revive the interbank foreign exchange market, which had been inactive in recent years, because of what traders said was aggressive policing by the central bank.

On Thursday central bank governor Patrick Njoroge said the return of interbank trade over the past two weeks had smoothed out volatility in the shilling’s exchange rate.

“There’s a cooling off on the demand side because of the revival of the interbank market,” said a trader at one commercial bank.

On Wednesday, the central bank raised its benchmark lending rate to 9.50% from 8.75% previously and said there was room for further tightening of monetary policy in anticipation of higher inflation.

(Reporting by Hereward Holland; Editing by Shailesh Kuber)