Kenya's shilling fell to a 4-year low against the dollar on Monday, weighed down by interbank demand after data showed hard currency inflows from Kenyans abroad fell 27 percent in January. At 1000 GMT, commercial banks posted the unit at 80.10/20 against the dollar after it hit 80.30 earlier on Monday, a level last seen in December 2004, according to traders and Reuters data.
"We are still bearish on the shilling ... this report about reduction in remittances from abroad (could cause a) problem with the flows," said Omar Abdalla of Gulf African Bank. Figures posted on the Central Bank of Kenya's website showed Kenyans abroad sent home $39.535 million in January, down from $53.925 million in the same month a year earlier and $40.930 million in January 2007.
Abdalla also cited imports of maize as a factor weakening the shilling. Kenya is importing millions of bags of maize after a prolonged dry spell left 10 million people facing food shortages in the east African nation.
Remittances from Kenyans living abroad are an important source of support for the currency, along with earnings from agricultural exports and tourism. Kenyans sent home $611 million in 2008, up from $574 million in 2007 and $408 million in 2006.
Traders said increased interest in the market from offshore players contributed to the shilling's fall. The slide came after the currency had been boxed in a 79.00-80.00 range against the dollar for weeks.
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