April 15, 2014 / 8:57 AM / 3 years ago

Kenyan shilling eases as energy importers buy dollars

3 Min Read

NAIROBI, April 15 (Reuters) - Kenya's shilling weakened on Tuesday due to dollar demand from energy importers.

Leading commercial banks quoted the shilling at 86.95/87.05 by 0804 GMT, easing from 86.70/90 on Monday.

"The shilling has weakened slightly on account of energy sector dollar demand," Commercial Bank of Africa trader Joshua Anene said.

Traders say central bank liquidity mop-ups are easing some of the pressure on the shilling but it is not enough to fully offset excess liquidity weighing on the local currency.

The Central Bank of Kenya (CBK) has frequently drained liquidity over the past month after overnight dollar borrowing rates tumbled, making it cheaper for banks to fund long dollar positions and putting pressure on the shilling.

By removing excess liquidity from the market, the CBK makes it more expensive to hold onto long dollar positions, which in turn supports the shilling. The bank sought to mop up 8 billion shillings on Tuesday through repurchase agreements.

It bought 12 billion shillings through repurchase agreements on Monday compared with its target of 17 billion.

"The continuous liquidity drain by the central bank is only likely to slow the pace of the weakening," said Anene.

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

KESF= 0#KESF=.....................Shilling forward rates

EURKES= KESX= KESX1=.......................Cross rates

KES=KE..................................Local contributors

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

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

CBK03 CBK06 KE3MTB=...............Treasury bill yields

CBK04..................Central bank open market operations

CBK07.........................Horizontal repo transactions

KEIBR=, CBK02................Daily interbank lending rate

0#KETSYSTR=.............................Kenya Bond pricing

ECONAFRICA..................Real time Africa economic data

<ECI & AFR> ...........................African economic news

.NSE20 .................................NSE-20 Share Index

.NASI .................................NSE All Share Index

.FTFNKEN1 ...........................FT NSE Kenya 15 Index

.FTFNKEN2 .......................... FT NSE Kenya 25

IndexSPEED GUIDES:

REUTERS KES/1 KE/DEBT MONEY KE/EQUITY ($1 = 86.8000 Kenyan shillings) (Reporting by Drazen Jorgic; Editing by James Macharia and Louise Ireland)

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