NAIROBI: The Kenyan shilling hit its highest level this year for the second day running on Wednesday as the prospect that the government would use a new Eurobond to pay off a large chunk of another bond maturing in June buoyed investor appetite.

The shilling strengthened as much as 152.50/153.50 to the dollar, a level it last traded at in late November, compared with Tuesday’s close of 155.50/156.50, LSEG data showed. Kenya raised $1.5 billion from the new Eurobond sale, with an order book exceeding $6 billion, but it was forced to pay a high price with a double-digit yield.

The government has said it will buy up to $1.4 billion of its $2 billion international bond due in June this year, after it launched a tender offer last week.

One trader said the government’s debt management exercise was helping because there was now confidence that the 2024 Eurobond would be repaid, adding this had helped stop panic buying of foreign currency that has seen the shilling set repeated record lows since late 2021.

Kenyan shilling stable; seen gaining ground on more dollar inflows

Other factors supporting the currency include foreign inflows into a 70 billion shilling infrastructure bond on sale and the central bank talking up the shilling as it raised interest rates again last week, traders said.