NAIROBI, March 9 (Xinhua) -- The Kenya shilling strengthened further against the U.S. dollar on Thursday following increased inflows from foreign investors seeking to trade in government securities.
The Central Bank of Kenya quoted the local unit Thursday morning at 102.5 against dollar from 102.6 the previous day. However, commercial banks placed the value of the shilling against the dollar even higher at an average of 102.4 as they attributed the surge to increased foreign investors' inflows amid low dollar demand from importers. On Wednesday, the Kenyan currency gained 0.02 percent against the dollar as it sustained gains from the previous days, where it had risen 0.22 percent on Monday and 0.01 percent Tuesday.
Last month, the Kenya shilling appreciated against the dollar by 1 percent to close at 102.9, from 103.9 in January. The strengthening of the shilling during the month was primarily driven by dollar inflows from offshore institutional investors and horticultural produce exporters, according to Nairobi-based investment firm Cytonn. However, on a year-to-date basis, the shilling has depreciated against the dollar by 0.2 percent. Besides inflows from foreign investors and horticulture, the currency has also received key support in recent weeks from higher diaspora remittances.Analysts, however, warn that rising food prices which have pushed up inflation, surging oil prices and an ongoing drought may erode the shillings gains in coming weeks.