Kenyan shilling weakens on importer demand

The Kenyan shilling weakened against the dollar on Thursday as oil importers and corporate buyers bought the greenback but traders were optimistic the local currency would strengthen on offshore demand for government securities.

High yields on Treasury bills and bonds have fuelled investor appetite, especially for the short-dated paper.

On Thursday, the central bank will sell 91-day Treasury bills worth 4 billion shillings, with a one-year bond as well as
a 12-year infrastructure bond set for auction next week.

At 0800 GMT, commercial banks quoted the shilling at 82.95/83.15 to the dollar, weaker than Wednesday's close of
82.80/83.00.

"We have seen a bit of (dollar) demand from oil players," Ignatius Chicha, head of markets at Citibank said.

"We have some supply from non-governmental organisations, but(dollar) demand is higher."

Chicha said offshore investors were expected to participate in the upcoming auctions which would strengthen the local
currency.

The 182-day Treasury bill attracted a 227 percent subscription rate, with a weighted average of 19.539 percent from 20.024 percent last week, with investors keen to reap capital gains in tandem with easing inflation.

"For now I am still bullish on the shilling," Duncan Kinuthia, head of trading at Commercial Bank of Africa said.

"I do not foresee any significant buying since we are not yet on end month (dollar) demand."

Reuters