NAIROBI: The Kenyan shilling held steady on Monday but was expected to stay under pressure due to dollar demand and increased liquidity in the money markets.
At 0813 GMT, commercial banks quoted the shilling at 86.50/60 to the dollar, unchanged from Friday's close.
"The shilling is on the back foot due to ample liquidity in the market. Overnight rates have dropped to as low as 5.6 percent, so you can imagine the kind of pressure there is on the shilling," Nahashon Mungai, trader at KCB Bank Group, said.
"There is also natural dollar demand, so that's also weighing on the shilling. The next level we are targeting is 86.65/75, where we typically see some interbank selling pressure."
On the interbank market, the weighted average interbank rate dropped to 5.3407 percent on Friday from 5.6468 percent a day before.
Lower overnight lending rates and increased shilling liquidity make it relatively cheaper to hold on to long dollar positions.
Last week, the central bank entered the market on three occasions, mopping up a total 29 billion shillings.
The shilling has gained 0.06 percent against the dollar so far this year.
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