NAIROBI: The Kenyan shilling eased slightly against the dollar on Wednesday due to demand for the US currency in the energy sector and traders said they expected it to remain under pressure after weekend bomb attacks unsettled market confidence.
At 0820 GMT, commercial banks quoted the shilling 87.00/10 to the dollar, compared with Tuesday's close of 86.95/87.05. In early trade the shilling weakened to touch 87.05/15.
"It's losing ground a bit on importer demand. There's a bit of demand going through vis-a-vis low supply, energy guys I've seen," said Julius Kiriinya, trader at African Banking Corporation.
In the medium term, poor rainfall in parts of the country where most farming takes place is also seen weighing on the local currency.
At least seven people were killed in blasts in Nairobi and Mombasa over the weekend, which are likely to inflict further damage on Kenya's embattled tourism industry. No one has claimed responsibility, but officials suspect militants linked or sympathetic to Somali Islamists.
"The sentiment of a stronger shilling is still hurt because of the recent terrorist attacks, and now we have failed rainfall which is going to hurt economic growth," Sheikh Mehran senior trader at Kenya Commercial Bank, said.
Traders said they expected the shilling to trade in a range of 86.80 to 87.50 in the coming days.
"In the near term, the odds are stacked against the local unit and we believe that, in the absence of any market-changing event, the greenback will trade well above the 87.00 psychological level," Commercial Bank of Africa said in its daily market report.
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