Shilling slips, tight liquidity seen supporting
25 October 2013, 14:37
Nairobi - Dollar buying by importers brought a slight weakening of the Kenyan shilling on Friday, though traders said the African currency is likely to play in recent ranges after a month-long squeeze on liquidity.
The shilling was posted at 84.85/95 to the dollar at 0804 GMT, against Thursday's close of 84.70/80.
"We've seen some interbank guys buying (dollars) on the back of customer demand," said Duncan Kinuthia, head of trading at Commercial Bank of Africa.
The currency has been hemmed in the 84.50-85.00 range this week as tight liquidity on money markets makes it expensive for banks to hold long dollar positions.
Heavy demand by the government debt as well as equities from offshore and local investors this month has drained shillings from the market. Payment of annual bonuses to tea farmers this week has also increased the tightness.
On the money market, the overnight weighted average interbank rate rose to 11.1706 percent on Wednesday from 11.1706 percent on Tuesday, having risen gradually from 6.9383 on September 17.
"As long as there is tightness in the money markets the shilling will play back and forth in this range," Kinuthia said.