Kenyan shilling eases as importers seek dollars, eyes on MPR meeting
Central Bank of Kenya (CBK) is widely expected to keep its benchmark lending rate at 11.50 per cent. PHOTO | FILE
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Traders said the shilling was otherwise expected to trade in a narrow range while the market awaited the outcome of the central bank's Monetary Policy Committee meeting on Tuesday.
The Kenyan shilling weakened on Tuesday as importers sought dollars to pay their bills, but traders said tight liquidity was limiting the local currency's losses while caution reigned before a central bank policy meeting later in the day.
At 0722 GMT, commercial banks quoted the shilling at 105.45/65 to the dollar, compared with Monday's close of 105.30/40.
"There's slight (dollar) demand in the market, though the tight liquidity is slowing down the process of weakening. Demand is from all sectors, all importers," a senior trader at one commercial bank said.
In a sign of the scarcity of shilling liquidity, the weighted average interbank lending rate rose to 25.2328 per cent on Monday from 24.5569 per cent on Friday.
Traders said the shilling was otherwise expected to trade in a narrow range while the market awaited the outcome of the central bank's Monetary Policy Committee meeting on Tuesday.
Thirteen of 15 analysts polled by Reuters forecast that the bank will keep its benchmark lending rate at 11.50 per cent.
CBK action
Central bank said that it planned to mop up Sh9 billion ($85.3 million) in excess liquidity from the money markets.
The bank uses repurchase agreements and term auction deposits to take out the liquidity, which makes it expensive to hold dollars and in turn lends support to the shilling.
