The Star (Nairobi)

9 May 2012

Kenya: Shilling Holds Firm Versus Dollar

The Kenyan shilling eased marginally against the dollar yesterday, and traders said it could come under more pressure in coming days from demand for greenbacks from oil importers. At 0732 GMT, commercial banks quoted the shilling at 83.30/40 per dollar, barely changed from Monday's close of 83.20/40.

"The major greenback buyers in the energy and oil sectors have been out for a while now, and there are chances that they might be in the market to start buying to meet their mid-month orders," said Bank of Africa in a daily report.

Oil makes up the largest import bill item in the East African country, which discovered oil deposits in March and is trying to determine the commercial viability of the find.

The shilling has gained modestly this year, helped by high base interest rates and central bank repurchase tenders to mop up excess liquidity. The bank held rates at 18 per cent for a fifth month in a row on Thursday.

Traders said they expected the central bank, which has soaked up Sh25 billion shillings since April 27, to run further tenders this week after strong demand indicated continued excess liquidity in the market.

The mop-ups helped push up the weighted average interbank rate to 16.3 per cent on Monday from 16 per cent on Friday. "The central bank could be back in with repos," said a trader at one commercial bank.

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