Shilling weakens marginally before Saba Saba rally
07 July 2014, 11:27
Nairobi - The Kenya shilling weakened marginally in early trade on Monday with all eyes on the planned Saba Saba rally in Nairobi, which could stoke political tensions.
Traders said market direction was being dictated by political events rather than fundamental demand. Most companies seek dollars near the end of the month to meet payments to suppliers.
At 0646 GMT, commercial banks quoted the shilling at 87.90/88.00 to the dollar, weakening slightly from Friday's close of 87.85/95. Traders said the shilling could strengthen modestly, possibly to 87.50, if Monday's rally was peaceful.
"There is usually not much pressure at this point in time. Demand usually comes at the end of the month," said Alex Muiruri at Kestrel Capital. "This recent move is just triggered by politics and not much activity on the corporate side."
Opposition leader Raila Odinga has called for a big rally on Monday in Nairobi's Uhuru park to demand dialogue with the government over a spate of militant attacks, an economic slowdown, corruption and other issues.
Gunmen killed at least 29 people on Saturday night in attacks on two separate places on the Kenyan coast, the latest in a series of assaults. A Somali Islamist group claimed responsibility but the government suggested local opponents were to blame, remarks likely further to fuel tensions.
"Today there will be cautious trading looking to the outcome of the (political) rally which we expect to be peaceful," said Joel Mbuvi, head of treasury at African Banking Corporation, adding that the shilling could strengthen modestly after that.