NAIROBI, Jan 30 (Reuters) – The Kenyan shilling strengthened against the dollar on Monday helped by high local interest rates, but it is expected to come under pressure from importer demand as the month draws to a close.

At 0630 GMT, commercial banks quoted the shilling at 84.65/75 to the dollar, stronger than Friday’s close of 84.90/85.10.

Traders said the shilling was benefitting from Kenya’s relatively higher interest rates that made it more favourable to hold the local currency.

“It’s slightly stronger … it’s just interbank (dollar) selling. I think the trend for a stronger shilling is likely to continue, until maybe 84.50,” said a senior trader at a commercial bank.

“There might be a bit of demand for the end of the month from the energy sector, or power … but we wait and see,” he said.

The weighted average interbank lending rate stood at 22.67 percent on Friday, up from 18.23 percent a week before.

“The Kenya shilling seems to be on the front foot today against the dollar. It’s benefitting from the high interest rates, the tightening market,” said Dickson Magecha, a trader at Standard Chartered Bank.

“We have seen the interbank rates going higher and higher. If the trend continues, the Kenya shilling will keep benefitting from the high interest rates, and possibly to trade below 84.50 soon,” he said.

On the Nairobi Securities Exchange, shares in Kenya Airways fell as much as 2.2 percent to 19.80 shillings in the first trading session after the airline, part-owned by AirFrance-KLM, issued a profit warning late on Friday.

Ranked among Africa’s leading carriers, the airline warned that the euro zone crisis, escalating fuel prices and political unrest in Egypt last year would see full year revenues for the year ended March fall by at least 25 percent. At 0705 GMT, it traded at 20.0 shillings.

Its share price is down 56 percent in the 12 months to Monday, making it the worst performer on the NSE-20 Share index , according to Thomson Reuters data.

Reporting by George Obulutsa and Richard Lough, Reuters

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