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Kenya shilling weakens vs dlr on demand

Thu May 15, 2008 7:45am EDT

NAIROBI, May 15 (Reuters) - The Kenya shilling KES= eased against the U.S. currency on Thursday due to high dollar demand from importers and the energy sector, dealers said.

At 1110 GMT commercial banks quoted the local unit at 61.85/95 to the dollar, compared to Wednesday's close of 61.70/90.

Dealers said the local currency's failure to break the 61.50 level drove the corporate clientele to start buying in the middle of the month when the prices were right.

Ordinarily, demand for dollars sets in at the end of the month as importers seek the greenback for their monthly obligations.

"Demand is starting to set in," said Robert Oloo, a dealer at Kenya Commercial Bank. "It is driven mainly by the oil companies and importers from the industrial sector."

Traders added that strong dollar demand started late in the previous session and was sustained on Thursday.

"It has been really busy due to importer demand," said James Ndegwa, a dealer at Imperial Bank.

The shilling has strengthened in recent weeks as the market took positions ahead of expected inflows from a 25 percent flotation of mobile phone firm Safaricom [SCOM.NR], in what is shaping up as sub-Saharan Africa's biggest IPO.

But the method through which offshore investors will pay for their allocations in the sale is still not clear, putting the market in a wait-and-see mode.

Dealers said the government might opt to receive the funds directly through the Central Bank.

"If the money comes through our commercial system, then the shilling will appreciate much more, but if that does not occur then we might see a slight correction" Oloo said.

Dealers predicted the shilling will trade at 61.50-62.00 in the coming days.

KES= KES1=............Shilling spot rates

KESF=...............Shilling forward rates

EURKES= KESX=.Cross rates

<KE/CONT1=>............All Kenya Contributors

CBKINDEX........Central Bank of Kenya Index

<KE/DEBT>......Kenyan Bonds contributor pages

CBK03 CBK06 KE3MTB=.Treasury bill yields

KEIBR=,CBK02..Daily interbank lending rate

<0#KETSY=>...Kenya Bond pricing

SPEED GUIDES: REUTERS <KES/1> <KE/DEBT> MONEY (Reporting by Duncan Miriri; Editing by David Christian-Edwards)



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