NAIROBI: The Kenyan shilling eased slightly on Tuesday and was expected to keep in a tight range, with traders saying they were watching for central bank action in the money markets.
At 0807 GMT, commercial banks quoted the shilling at 88.50/70 to the dollar, compared with Monday's close of 88.50/60.
Traders said they were watching to see if the central bank will roll over a reverse repurchase agreement that injected 30 billion shillings into a tight money market last week.
"There is a repo which is maturing today. I don't know whether they shall renew that. But it seems liquidity has improved in the market, so don't expect any action today," John Muli, trader at African Banking Corporation, said.
Traders said the liquidity conditions had improved due to government departments starting to spend money from the 2014/15 (July-June) fiscal budget.
Delays by the government to release funds to departments and local authorities led to a liquidity crunch, leading to overnight borrowing rates on the interbank market shooting up.
"In terms of the shilling, it is doesn't roll it over, we might see a bit of a tightness. But it is being counteracted. The government has already started spending," Eric Gathecha, trader at I&M Bank, said.
Traders said they forecast the shilling to trade in the 88.20-89.00 range in coming days.
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