NAIROBI, Feb 21 (Reuters) – The Kenyan shilling weakened on Tuesday on dollar buying by energy firms, but traders said inflows from farm exporters and liquidity tightening by the central bank would support the local currency.

Central Bank of Kenya

The Central Bank of Kenya (CBK) has so far mopped up 40.33 billion shillings ($484.3 million) through repurchase agreements this year, to prevent last year’s scenario when it was blamed for letting the shilling plunge through a series of record lows against the dollar.

At 0716 GMT, commercial banks quoted the shilling at 83.35/55 against the dollar, weaker than Monday’s close of 83.25/45.

“We’ve seen slight demand for dollars from the energy sector and we expect the shilling to settle at about 83.70 per dollar,” said Julius Kiriinya, a trader at African Banking Corporation.

“CBK, having been out for a while, may be back with repos to support the shilling.”

Traders said they expected the local currency to trade in the 83.20-84.30 range during Tuesday’s session.

They said tea and horticulture sector exporters could also come in selling dollar, which would stem the shilling’s decline.

“We should see some dollar selling interest from exporters, particularly from tea and horticulture sectors at levels above 83.50,” said Robert Gatobu, a trader at Bank of Africa.

(Reporting by Kevin Mwanza; Editing by George Obulutsa and Ramya Venugopal)


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