January importer demand puts shilling under pressure
The shilling lost slightly against the US dollar on Thursday as more importers stocked up goods for the start of business following the festive season. The local currency touched a seven-day low with 102.10 units buying one dollar.A dollar was sold at 102.30 units at 10.54am, according to Reuters data. It had closed Wednesday buying at 102.05 units and selling at 102.25 units. By 2.30pm was buying one dollar at 102.13 units and selling 102.23 units. Reuters linked the pressure to increased demand for hard currency from goods importers as the pace of business accelerated after Tuesday’s New Year celebrations.The trend is in line with what has been witnessed in previous years where a rise in January imports has exerted pressure on the shilling. This comes at a time analysts at Citi Global Markets have tipped the shilling to lose ground against the dollar due to fiscal and current account deficits as well as lower foreign exchange reserves.However, fresh data from the Kenya National Bureau of Statistics (KNBS) covering up to September last year show that the current account deficit narrowed by 23.1 per cent from a deficit of Sh150.9 billion in the third quarter of 2017 to Sh116 billion in the third quarter of 2018.This was mainly driven by increased value of exports in goods and services as well as reduced value of food imports, according to KNBS. In the same period, balance of payments recorded a deficit of Sh39.2 billion, an improvement from a deficit of Sh70.1 billion in the corresponding quarter of 2017.