Kenyan Shilling Trades with Weak Knees

The Kenyan Shilling (KES) was vulnerable at the start of the week as it faced pressures from both external and internal factors. The USDKES exchange rate shed 0.50% to 103.70 (12:30pm GMT), dampened by month end dollar demand from importers as well as improved liquidity in the money market.

The local unit is also taking a hit from global portfolio outflows which have severely affected emerging markets. Consequently, global stocks dipped significantly last week, and the only assets to perform well were the traditional “flight to safety” assets.

However, the euro has proved a surprise outlier, appreciating 4.5% against the U.S. dollar in the last two weeks. The local unit chalked losses of 2.51% against the Euro (EUR); the strong performance of the single unit currency may be attributed to waning fears about European economies.