NAIROBI: The Kenyan shilling closed slightly weaker on Monday due to dollar demand from oil companies, while stocks edged higher.
At close of trade at 1300 GMT, commercial banks quoted the shilling at 88.50/60 to the dollar, compared with Friday's close of 88.40/50.
The slight easing was in line with earlier trader forecasts which pointed to dollar demand carrying over from August. Typically demand for the US currency comes from importers in sectors such as manufacturing, energy and telecommunications.
"There was (dollar) demand here and there that pushed it higher," said John Njenga, a trader at Commercial Bank of Africa, citing oil companies.
Traders said liquidity in the money markets would also determine the direction the shilling takes, given that a reverse repurchase agreement that injected 30 billion shillings into the market last week was maturing on Tuesday.
"If they don't roll it over, the money market will be tight and we expect (the shilling) it to gain. If they roll it over or take more than 30 billion it may weaken," Njenga said.
Traders said they were also eyeing a meeting on Wednesday by the central bank's Monetary Policy Committee which is due to set the key lending rate.
Year-on-year inflation rose to 8.36 percent in August from 7.67 percent in the previous month, the Kenya National Bureau of Statistics said on Monday. The inflation rate was now outside the bank's preferred medium-term range of 2.5-7.5 percent.
Traders said they expected the shilling, which has lost 2.1 percent against the dollar so far this year, to trade in a range of 88.20 to 88.80 in the coming days.
On the Nairobi Securities Exchange, the main NSE-20 Share Index was up slightly by 1.53 points to close at 5,140.92 points.
On the secondary market, government bonds valued at 1.32 billion shillings were traded, up from 680.2 million shillings on Friday.
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