The market remains unfavourable for the shilling, with continued pressure on the local currency seen starting this week, pushing the pair above 1660 level.
The last trading session of the month of May saw the shilling losing ground further against the dollar to new all time lows since the beginning of the year.
The NMB e-market report attributes the pressure on the demand for US dollars from oil importers and other manufactures.
“Piled up demand from Oil importers and other manufactures with little month end flows caused the shilling to depreciate to 1642/1692 levels with expectation of the situation to persist throughout this week,” stated the report.
Starting Monday, the shilling further lost grounds against the dollar as increased demand in the market put pressure on the local unit.
The same pressure was again expected yesterday with medium price volatility in the market.
However, according to Exim bank foreign exchange and money market report, the depreciation of the shilling against the US dollar will last for a short time as tourism season starts this June, with expectation of huge inflow of foreign currency.
The dollar eased against other major currencies at the last day of May as traders tidied up books at month’s end and warily awaited potentially market-moving meetings next week by the European Central Bank and other monetary policymakers. The dollar, as tracked by the US dollar index.
DXY of a half dozen currency pairs, traded softer in a tight range and was last off 0.11 per cent at 80.487.
Earlier this week, the index was at highs not seen since early April. China’s Yuan slipped against the dollar on Friday and was set to post its third straight weekly loss as investors remained concerned about the cooling economy and seasonal dollar demand in the coming months.
The Sterling Pound recovered some ground on Friday after a week of heavy selling that has cast doubt on the UK currency’s run to 5-1/2 year highs.
The pound has risen more than 10 per cent against a basket of currencies in the past 12 months on the back of expectations that an improving economy would force the Bank of England to raise interest rates faster than its euro zone and US peers.
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