NAIROBI: The Kenyan shilling held steady against the dollar on Monday and traders said it could recoup some of its recent losses as firms make tax payments and a bond auction sucks up supplies of the local currency in the banking sector.
At 0720 GMT, commercial banks posted the shilling at 86.45/55, unchanged from Friday's closing level. Traders said they were watching the level of shilling liquidity in the money markets for clues on where the currency was likely to head.
"It is expected to be tight in the coming days due to tax payments," said Sheikh Mehran, a senior trader at KCB Bank.
Corporate tax payments are due on Nov. 19, traders said.
The overnight borrowing rate has been tumbling for the past week, causing the shilling to weaken as banks found it slightly easier to fund long dollar positions.
The rate dropped to 9.1822 percent on Friday from nearly 13 percent at the start of the week, partly aided by the central bank's moves to inject liquidity using reverse repurchase agreements.
Mehran said a Treasury bond auction for up to 10 billion shillings ($115.67 million) scheduled for Wednesday could further curb liquidity in the money markets.
Technical charts showed if the shilling fell past the dollar resistance of 86.50, it could weaken towards the 88.00 per level.
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