Kenyan shilling rallies against the dollar

01/07/2011 - Kenya property & investment news Posted by Bob Brunskill
Kenyan shilling rallies against the dollar

The Kenyan shilling's rally against the dollar extended to a fourth day on Friday (July 1st), Reuters.com has reported.This comes shortly after banks sold dollars to fund shilling positions after the central bank increased overnight lending rates in a bid to tighten liquidity.In order to tame a volatile currency and rising inflation, the Central Bank of Kenya set an overnight discount rate of eight per cent on Wednesday.However, traders observed that banks opted to sell dollars for shillings rather than borrow from the window."There was profit taking on long dollar positions and funding of shilling positions," Julius Kiriinya, a trader at African Banking Corporation, commented."People don't want to borrow from the window ... because it's not as easy as it was before."The central bank is widely expected to continue tightening monetary policy to fight high inflation, which reached 14.49 per cent last month.