Shilling stable for now
15 August 2013, 14:06
Nairobi - The Kenyan shilling was steady on Thursday as subdued demand for dollars, but traders said the local currency could come under pressure over the next two weeks as importers buy dollars to settle end-of-month payments.
The shilling traded at 87.50/70 to the dollar by 0748 GMT, barely changed from Wednesday's close of 87.45/65.
Traders said there was more liquidity in the market after the increased supply by the Central Bank of Kenya on Monday and Tuesday though reverse repurchase agreements may keep weighing on the shilling.
Weighted average lending rates on the money market fell for the second day, dropping to 8.5998 percent on Wednesday from 8.8581 percent previously as liquidity eased.
Increased shilling supply usually makes it easier for banks to hold long dollar positions, depressing the local currency.
"The shilling's staying power will be tested when demand for the dollar returns to the market," said Commercial Bank of Africa in a daily report.
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