Kenyan shilling steady, tight liquidity to give a boost
29 January 2014, 14:48
Nairobi - The Kenyan shilling was little changed on Wednesday and traders said they expected it to trade in a narrow band due to tight shilling liquidity that would keep the local currency from weakening due to importer dollar demand.
At 0725 GMT, commercial banks quoted the shilling at 86.00/10 to the dollar, compared with Tuesday's close of 85.95/86.05.
Julius Kiriinya, a trader at African Banking Corporation, said there was some importer demand that was putting pressure on the shilling. However, any further weakening was expected to be kept in check by tight shilling liquidity.
Tighter shilling liquidity makes it slightly costlier for banks to fund long dollar positions, which helps strengthen the local currency.
The weighted average interbank lending rate rose to 10.5393 percent on Tuesday from 10.2298 percent a day earlier.
"We don't expect much movement because the market is very tight on the Kenya shilling," said Sheikh Mehran, a senior trader at Kenya Commercial Bank.
Traders said they expected the shilling to trade in the 85.70 to 86.20 range in the coming days.