Kenyan shilling eases, traders eye central bank action on liquidity

Wed Aug 6, 2014 4:52am EDT

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NAIROBI, Aug 6 (Reuters) - The Kenyan shilling eased
slightly on Wednesday, taking cue from central bank's action of
injecting local currency into the market a day earlier after
tight supply saw interbank lending rates rise, discouraging
banks from holding dollars.
    Traders said they were watching to see if the Central Bank
of Kenya (CBK) would return to the market, a day after it
injected 8 billion shillings ($90 million) using reverse
repurchase agreements following days of strained shilling
liquidity that led to interbank lending rates rising.
    At 0757 GMT, commercial banks quoted the shilling at
87.80/88.00 to the dollar, compared with Tuesday's close of
87.85/95.
    "We have weakened slightly from yesterday after the CBK came
in to pump in shillings in the market," Sheikh Mehran, head of
trading at I&M Bank, said.
    The volumes borrowed on the interbank market fell to 15.48
billion shillings on Tuesday from 22.26 billion shillings a day
earlier, but the weighted average lending rate rose to 10.7589
percent from 10.5181 percent on Wednesday, pointing to tight
liquidity still prevailing.
    Mehran said the shilling could be capped from weakening past
88 due to dollar inflows from foreign investors buying stocks on
the Nairobi Securities Exchange (NSE).
    "We predict that this level will hold quite strongly at 88.
There is increased foreign participation at the NSE which is
likely to give the shilling a boost," he said.
    Traders forecast the shilling to trade in the 87.50 to 88.00
range in coming days.
    
 ...........................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 = 87.9000 Kenyan Shillings)

 (Reporting by George Obulutsa; Editing by Toby Chopra)
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