Kenya shilling holds steady, underpinned by central bank operations
09 April 2014, 08:45
Nairobi - Kenya's shilling remained shackled to 86.60/70 in early trading on Tuesday, supported by expectations that the central bank will keep draining excess liquidity from the money market, traders said.
The 86.60/70 level - where the shilling ended Monday - was nudging the local currency's support level, market participants said.
"It's at its top. It's a good opportunity for exporters, they've been sniffing around," said Sheikh Mehran, senior trader at Kenya Commercial Bank.
Traders anticipated the Central Bank of Kenya would maintain its policy of absorbing excess liquidity to support the shilling. Taking shillings out of the market helps lift the overnight lending rate, making it more expensive for banks to hold long dollar positions.
The central bank mopped up 10.9 billion shillings ($125.8 million) on Monday.
Bank of Africa said there was reduced dollar demand from corporate clients now that the typical end-month rush for dollars had subsided.