Kenya shilling flat, seen weakening on energy demand for dollars

NAIROBI, March 14 Fri Mar 14, 2014 3:35am EDT

NAIROBI, March 14 (Reuters) - The Kenyan shilling was flat on Friday, but traders said it was likely to weaken on rising dollar demand from the energy sector and excess liquidity.

At 0800 GMT, commercial banks quoted the shilling at 86.45/55 per dollar, from Thursday's close of 86.40/50.

Traders said the central bank was likely to mop up excess liquidity, as it has done since last week. Excess liquidity makes it cheaper to hold long dollar positions, weakening the shilling.

"Two fundamentals are driving the market, demand and supply for dollars and the fact that the market is fairly liquid," Commercial Bank of Africa trader Joshua Anene said.

"There is increasing demand from the energy sector. It is likely we could be headed for a weaker shilling level by the time the market closes."

Traders said the central bank had consistently mopped up excess liquidity since last week and was expected in the market. By mopping up liquidity, the bank makes it relatively costlier to hold onto long dollar positions, which in turn helps strengthen the shilling.

On Thursday, the bank absorbed 6.95 billion shillings ($80.37 million) from the market using repurchase agreements at a weighted average rate of 6.375 percent, a day after draining another 6.1 billion shillings.

...........................Shilling spot rates .....................Shilling forward rates .......................Cross rates ..................................Local contributors .......................Central Bank of Kenya Index .....................Kenyan Bonds contributor pages ...............Treasury bill yields ..................Central bank open market operations .........................Horizontal repo transactions ,................Daily interbank lending rate .............................Kenya Bond pricing ..................Real time Africa economic data <ECI & AFR> ...........................African economic news .................................NSE-20 Share Index .................................NSE All Share Index ...........................FT NSE Kenya 15 Index .......................... FT NSE Kenya 25 Index SPEED GUIDES:

($1 = 86.4800 Kenyan Shillings) (Reporting by James Macharia; Editing by Catherine Evans)

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