NAIROBI (Reuters) – The Kenyan shilling slumped to a record low of 90.37 against the dollar on Thursday, pushed by banks covering their short positions, and traders said the shilling would remain volatile amid continued speculation.
The shilling fell 2.21 percent to breach the psychological 90.00 level against the dollar.
At 0925 GMT, commercial banks quoted the shilling at 90.30/40 against the dollar, down from Wednesday’s close of 88.30/40.
“There is no resistance anymore in this market … it’s a one way fall now,” said a trader.
“The speculative premium in the market is too high. As long as there is nothing to stop it, the shilling will keep falling.”
Kenya’s central bank said on Thursday that it planned to mop up 1 billion shillings through repurchase agreements, in line with its policy of tightening the money supply to support the currency.
“We are seeing not just historic levels … the volatility is at a high too,” said Mwambu Malamba, a senior trader at Commercial Bank of Africa. “There is a feeling that KES is on its own.”
There were no bids for the bank’s 1 billion shillings repo on Wednesday due to tight liquidity.
The shilling gained 1.18 percent on Wednesday, the biggest intraday gain since June 6, 2010 when it gained 1.4 percent, traders said.
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