KES: Shilling To Hold As Financial Flows Offset Current Account Deficits

The Kenyan shilling found support at KES81.00/US$ after a six month bout of depreciation, during which it lost approximately 9% against the US dollar. With a weak recovery in the US and the Eurozone now priced in to the shilling's value, we believe that the currency will trade sideways between KES80.00/US$ and KES82.00 /US$ in the short term. Given Kenya's strong macroeconomic fundamentals, however, if the KES80.00/US$ resistance line is broken we would expect to see the currency appreciate to around the KES78.00 mark.

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