The shilling had fallen to that level mainly due to end month demand for dollars from importers. PHOTO | FILE
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Traders said they were keenly following events in the euro zone ahead of a referendum called by Greece because any weakening in the euro could put pressure on the shilling.
The shilling weakened to a new low on Thursday, with traders wary of central bank action to support the local currency, while stocks fell for a second straight day.
At close of trade, commercial banks posted the shilling at 99.50/70 to the dollar - a level last seen in October 2011 - weaker than Wednesday's close of 99.30/40.
The central bank was expected to protect the shilling from weakening beyond the 100 level, traders said.
"The outlook will mainly depend on what the central bank does," said a trader at a major commercial bank. "So far, we have seen mop-ups, but this has gone to slowing down the pace of depreciation, as opposed to stopping it."
Liquidity in the money market had increased in the last few days, accelerating the shilling's downward momentum, although the central bank tried to slow it by seeking to mop up huge amounts of cash through repurchase agreements.
The bank sought to mop up Sh21 billion ($212 million) from the market on Thursday. Mopping up liquidity makes it a bit more expensive for people to bet against the shilling.
The central bank has on a number of occasions this year sold an unspecified amount of dollars to support the shilling.
On the Nairobi Securities Exchange, the main NSE-20 Share Index was down 18.82 points to close at 4,839.60 points.
Among the losers were Uchumi Supermarket, which was down 0.10 shillings per share to close at 8.75 shillings, while Williamson Tea Kenya fell 19 shillings to close at 347 shillings per share.
On the secondary market, government bonds valued at Sh1.96 billion ($20 million) were traded, compared with Sh556.9 million in the previous session.
