Shilling steady, CBK mop-ups eyed
31 March 2014, 16:05
Nairobi - The shilling is set to shuffle in a narrow range against the dollar this week as central bank efforts to mop up liquidity offset possible demand from oil importers, traders said on Monday.
At 0752 GMT, commercial banks quoted the shilling at 86.40/60, little changed from Friday's close of 86.40/50.
"Outlook is again depending on CBK (the Central Bank of Kenya). If they are still in the market mopping up shillings, we could see the shilling strengthening a bit," said Andlip Nazir, senior trader at I&M Bank.
"And today is the last day of the month and of course demand is slightly depreciating so we could see the shilling slightly strengthening, maybe staying range-bound."
The central bank has regularly drained excess liquidity from the money markets in recent weeks, mopping up a total 16.25 billion shillings ($187.41 million) last week.
Removing excess liquidity makes it relatively costlier to hold onto long dollar positions, which in turn helps strengthen the shilling.
Traders said they were still seeing some dollar demand from oil importers.
"We do expect now oil companies to start coming through to the market in the new month. So I would say I would see the shilling boxed in a range, largely unchanged," a senior trader at one commercial bank said.
The shilling has gained 0.2 percent against the dollar so far this year.