Kenyan shilling steady, eyes on central bank action
05 January 2015, 11:33
Nairobi - The Kenyan shilling was steady on Monday and traders said they were watching for any action the central bank takes during the session to see what direction the shilling would take.
At 0735 GMT, commercial banks quoted the shilling at 90.75/85 to the dollar, the same as Friday's close.
"There is no demand in the market. The market has been thin, so the moves are not really because of demand or supply," Sheikh Mehran, head of trading at I&M Bank, said.
"All eyes of course would be on CBK (Central Bank of Kenya) actions. They have been mopping up."
On Friday, the central bank mopped up 8.65 billion shillings in excess liquidity from the money markets. Mopping up excess liquidity makes it relatively more expensive to hold long dollar positions, which partly supports the shilling.
In the past, the central bank has also sold dollars in the market whenever traders said the shilling approached 90.50 to the dollar.
Most recently, traders said the bank sold dollars on Dec.30.
"With the key 91.00 level in sight and market macro factors pointing to a softer local currency, we see a greater possibility on central bank’s intervention in the coming days," Commercial Bank of Africa said in its daily market report.
Traders said they forecast the shilling, which has lost 0.2 percent versus the dollar so far this year, to trade in the 90.50 to 91.00 range in coming days.
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