Kenyan shilling firms

Written By:Reuters,    Posted: Mon, Jul 04, 2011

The local currency gained for four straight days last week The Kenyan shilling firmed against the dollar on Monday as commercial banks continued to react to the central bank's increase in the overnight lending rate by selling dollars. Traders said they were watching for corporates taking advantage of the shilling gains to buy the greenback. The local currency gained for four straight days last week. The Central Bank of Kenya set an overnight discount rate of 8.0 percent on Wednesday, and said it will be posted on its website everyday at 0600 GMT, in a bid to tame a volatile currency and rising inflation. The discount rate was unchanged at 8.0 percent on Monday. At 0613 GMT, commercial banks quoted the shilling at 88.40/60 against the dollar, stronger than Friday's close of 88.70/80. "The shilling is still supported by high rates, but we would want to see if there would be some pent up demand from corporate clients who have been staying away." said Dickson Magecha, a trader at Standard Chartered Bank. Traders said they expected the shilling to trade in the 88.00-89.00 range on Monday. They said they expected the central bank to stay out of the foreign exchange market for now as the market reacts to the rate rise. The bank's attempts to mop up shillings from the market through repurchase agreements failed to attract any bids from banks for the 14th straight session on Friday. "We expect the shilling to strengthen due to tight liquidity in the market," said Wilson Mutai, a trader at African Banking Corporation.