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Shilling strengthens on T-bill yields, tea agency dollar sales

folarin okunola

October 2, 2015 6:12 PM

Yields on Treasury bills have also been climbing, attracting offshore investors. At this week's auction, yields rose above 20 percent on 91-day, 182-day and 364-day T-bills.

A currency dealer counts Kenya shillings at a money exchange counter in Nairobi in a file photo. REUTERS/Antony Njuguna

Kenya's shilling strengthened on Friday, supported by rising yields on government securities and dollar sales by tea agencies paying bonuses to farmers.

At 0642 GMT, banks quoted the shilling at 104.15/25 to the dollar, compared with Thursday's close of 104.40/50.

"The shilling has strengthened, but I don't know if we will get enough momentum to break 104," said one dealer at a commercial bank.

He said tea agencies were selling dollars to pay shilling bonuses to farmers, which are usually paid in April and October.

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Traders say a shortage of shilling liquidity has also been supporting the shilling and keeping overnight lending rates high. This week, overnight rights rose to around 27 percent, up from 13 percent in early September.

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