19 April 2010

Kenya: Shilling Eases Versus Dollar, More Losses Seen

Nairobi — Kenya's shilling eased on Monday, in a session dominated by interbank trading, and traders expected it to lose more ground after the horticulture sector was hit by flight cancellations to Europe.

At 0806 GMT, commercial banks quoted the local currency at Sh77.50/60 to the dollar, compared with Friday's close of Sh77.30/40.

"Because of the Iceland problems, we are not able to export, so most probably we will see the dollar going higher, the shilling losing," said Kalpesh Solanki, a trader at Ecobank.

Traders said they saw the shilling losing more ground due to the effects from a vast cloud of ash from an Icelandic volcano that has crippled air transport in northern Europe.

Kenya's horticulture industry, a leading foreign exchange earner, has been hit due to grounding of several flights from Nairobi to London and Amsterdam.

An association of flower exporters said last week they were losing up to $2 million a day in earnings due to the cancellations.

Traders said they expect the shilling to trade in the Sh77.20-77.80 range in the days ahead while charts pointed to resistance at Sh77.65 and Sh77.75.

"It is not all over for shilling bears, with the home unit likely to continue trading on the back foot on account of reduced foreign currency inflows if the ban on global air travel is extended," Commercial Bank of Africa said in a market report.

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