Rising oil prices in the global economy could depress the shilling further against the dollar, giving exporters an opportunity for foreign exchange gains that have eluded them in the recent past.
Market analysts, however, said Kenya’s rising credibility in international markets following the purge on graft that has seen three ministers hounded out of office in as many months could support the currency through direct investments and aid inflows.
“Oil Imports make up about 25 per cent of the local dollar demand, and the rising oil prices could put pressure on the shilling,” said Andrea Balongo, senior trader at Kenya Commercial Bank.
On Wednesday, the Kenyan shilling weakened against the dollar in response to the greenback gaining against other currencies globally.
Commercial banks quoted the shilling at 81.00/81.10 per dollar, down from 80.90/81.00 on Tuesday.
Traders expect the shilling to trade in a range of 80.80-81.30 as the market returns to normal business.
Traders said that in the long run, the intensifying war against corruption would likely boost investor confidence after a third minister was forced to step down on Tuesday on abuse of office charges.
A day earlier, the Attorney General had allowed the Kenya Anti-Corruption Commission (Kacc) to prosecute Mr Henry Kosgey in a rare rapport hailed as a breakthrough in the fight against graft.
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