Shilling Testing Key Resistance

Although easing slightly to trade at KES74.55/US$ at one point November 11, the Kenyan shilling is looking good to retest key resistance at KES74.00/US$. Our year-end target of KES73.00/US$ is coming closer into range. Despite increasing purchases of US dollars by the Central Bank of Kenya since Q209 to boost its foreign reserves, the shilling has continued to appreciate as dollar inflows have increased faster than local demand. Against this background, the decision by the central bank on November 9 to abstain from any market intervention sent the unit as high as KES74.00/US$, its strongest level in 14 months.

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