Kenya's central bank bought dollars on the foreign exchange market on Thursday to curb volatility, traders said, as the shilling rocketed to its strongest level since June 2023.
The central bank says it only intervenes to smooth out volatility when the shilling is moving too fast in either direction and that it has no preferred level for the currency.
At one point on Thursday, the shilling was up almost 8% on the day, hitting 139.00 to the US dollar, LSEG data showed.
The rally was fuelled by foreign inflows into Kenyan domestic debt and the resolution of a $2 billion Eurobond maturing in June.
After the central bank intervened, the shilling gave back some gains to be bid at 141.00, still up more than 6% from Wednesday's close.
'Strong signal'
"The central bank showed up to buy, so I think they don't want too much volatility. If they hadn't come in we would probably be looking at levels of maybe 130 because everybody knows offshore inflows are coming," one trader said.
"That is a strong signal that they (the central bank) want the currency to stabilise. It has to be gradual."
This week, Kenya sold a new $1.5 billion Eurobond maturing in 2031 which it will use to buy back via a tender offer a large chunk of the $2 billion bond due in June.
The government also sold a 70 billion shilling infrastructure bond, receiving over 288 billion shillings of bids, a 412% subscription rate, with strong offshore investor participation.
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