NAIROBI – The Kenyan shilling firmed on Wednesday to a seven-month high in the first day of trading after incoming President Uhuru Kenyatta was sworn into office in a peaceful handover of power.
Traders said corporate clients saw further gains ahead for the currency, reflecting relief at the smooth political outcome. Banks sold dollars as corporate demand for the U.S. currency remained subdued, traders said.
The shilling strengthened 0.2 percent in early trading to 84.35/55, a level it last reached on September 18, 2012. Markets were closed on Tuesday when Kenyatta was sworn into office.
“Corporate demand is not there, that’s why we’re seeing more interest to sell dollars,” said Duncan Kinuthia, head of trading at Commercial Bank of Africa, adding that corporate clients anticipated further gains for the shilling.
The shilling has rallied 1.6 percent since the March 4 vote following a largely peaceful vote won by Kenyatta, the east African country’s richest man and son of its founding president.
Kenyatta’s win was challenged, but the Supreme Court upheld his win and there was no repeat of the nationwide violence that followed an election in 2007.
“The doom and gloom had been priced into the shilling before the election and that’s correcting now,” Kinuthia added.
Tuesday’s smooth handover of power may provide a boost to investment in east Africa’s economic powerhouse, although the outlook is clouded by Kenyatta’s looming trial for alleged crimes against humanity at the International Criminal Court.
Traders said technical analysis suggested the shilling, which is 2 percent stronger so far this year, could target 84.00 in coming sessions.
“In the coming days we feel the shilling could try and break the psychological 84.00 level,” Bank of Africa in a daily note.