The Kenyan shilling edged down against the dollar on Tuesday and the spread between offers and bids continued to widen due to extreme market volatility, traders said.
At 0645 GMT, commercial banks quoted the shilling at 106.60/107.20 per dollar, compared with Monday’s close of 106.40/106.60.
Like other frontier currencies, the shilling has been pummelled by the outbreak of the coronavirus and it is hovering close to its record low of 106.70 against the dollar.
Traders said the central bank’s decision to slash rates and to reduce the cash reserve ratio (CRR) for banks could both support and work against the shilling.
“By cutting CRR, they have increased liquidity to help people buy dollars, but on the other hand reducing the benchmark rate makes it unattractive to hold shillings,” said a senior currency trader at a commercial bank.