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Kenyan shilling firms against dollar, gains may be short-lived
August 20, 2014 / 9:06 AM / 3 years ago

Kenyan shilling firms against dollar, gains may be short-lived

NAIROBI, Aug 20 (Reuters) - The Kenyan shilling firmed on Wednesday, buoyed by dollar inflows from the tea sector, but traders said the currency was more likely to weaken again in coming days.

At 0730 GMT, commercial banks quoted the shilling at 88.20/88.35 to the dollar, slightly down from Tuesday’s close of 88.35/88.45.

“There are inflows from tea sector sales,” said John Njenga, trader at Commercial Bank of Africa.

Tea is one of Kenya’s leading foreign currency earners and is sold at auction at the port city of Mombasa every Tuesday. Exporters typically convert their earnings into shillings to pay farmers and cover operational expenses.

The shilling, down about 2.3 percent against the dollar this year, has been weakening over the past few weeks, even though liquidity has tightened. Traders say dollar inflows have been scant.

The weighted average lending rate on the interbank market rose to 12.4918 percent on Tuesday from about 7.5 percent in mid-July, causing a mini liquidity crunch.

“If that is tamed, we may see the shilling weakening further,” added Njenga.

Traders say they are also looking to see whether the central bank will intervene to prop up the local currency as it has done regularly over the past year.

...........................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:

Reporting by Drazen Jorgic; Editing by Susan Fenton

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