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Kenyan shilling steady, seen falling on tourism downturn

07 April 2015, 14:38

Nairobi -  Kenya's shilling held steady on Tuesday, but traders said it would weaken in coming days as the market saw the full extent of the damage to the country's battered tourism industry from a militant attack on a university.

Gunmen from the al Qaeda-aligned al Shabaab group killed 148 people when they stormed the Garissa University College campus, about 200 km (120 miles) from the Somali border, on Thursday .

The shilling fell in reaction to the early reports of the attack on Thursday but markets were closed on Friday and Monday for Easter.

At 0716 GMT on Tuesday, commercial banks quoted the shilling at 92.65/85 to the dollar, compared with Thursday's close of 92.70/80.

"We expect the shilling to weaken further because too many things are affecting the market. Firstly it's because of the Garissa attack, which is really going to turn down tourism," Vimal Chudasama, treasury manager at Chase Bank, said.

"Secondly, globally the dollar is being bought. Globally the U.S. economy is doing good, so there is also demand from the offshore banks as well."

Hoteliers said tourists had started cancelling trips after the attack, further hurting an industry that is a key source of foreign exchange.

Chris Muiga, senior trader at National Bank, said he thought the news of the attack was already priced in.

Traders forecast the shilling, which has lost 2.3 percent so far this year, would trade in the 92.60 to 93.00 range in the next few days.

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- Reuters


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