hah this economy doing well,exports going up? what a load of cobblers....with the drought there is nothing to export! there are two factors affecting kshs.

1. the us$ has weakened internationally

2. the kengen bond issue has many foreign investors interested. which western country can currently offer a secure return of 12.5%??its a good deal for them. unfortunately there wont be many local investors.

Going Technical on the explanation is that when the general interest rate regime is going up,exchange rates go down. Currently the interest rates available to depositors is generally up possibly due to the Kengen IPO. Note that a bank that could not give you 10% interest on you cash can now offer you that rate. They know theyll reinvest it in the PIBO.

When interest rates increase generally the exchange rate falls (Interest Rate Parity Theorem). It seems like as long as the interst rates in the market keep increasing,the exchangerates will keep falling.

http://www.bized.co.uk/l...nge/interest_rate_4.htm



Want to be a millionaire.... plant a million cabbages and sell them at a bob...

Kenya Shilling Strong? [kizee]
Thursday,May 07,2009 13:16

at 80 kes was way oversold...especialy given the net funding cost of carry...anyway closed at 77.40*50...cbk buying and kes still rallyin..makes one wonder
......

repost of my May 7th post...hearing as well that there are some M&A deals goin down in telco and finance sector..tea inflows ca never cause KES to rally as it does..KTDA sell maybe 10-15 USD a week,a paltry amount....

in addition...the move beyond 74.5 to the Dec 07 close was caused by a combination of heightened risk aversion,maize imports and an illiquid kes spot market...all these three factors are now gone.....we will see an unwinding of short KES positions....i think KES will hit 70 by years end

@ feish

60.35 traded last year,strong is relative

There is good supply of the dollar in the economy so that could explain it...
- CBK effect
- dollar inflows - foreign investors' interest in kengen bond and government securities
offering attractive guaranteed returns
- receipts from tourism and agriculture especially tea
- improved remittances from diaspora

Generally,inflows are heavier than outflows as of now.

Experience is what you get when you don't get what you want.