NAIROBI: The Kenyan shilling was stronger on Thursday, and traders said it was expected to strengthen mainly due to dollar inflows from investors seeking to buy a Treasury bond on sale.
At 1005 GMT, commercial banks quoted the shilling at 88.95/89.10 to the dollar, compared with Wednesday's close of 89.05/89.15.
The central bank said it will auction a 12-year infrastructure bond worth up to 15 billion shillings ($168.63 million), which traders said was attractive to investors.
The proceeds will be used to fund transport, energy and water projects, and the bond is on sale between October 8 and October 21 ahead of its auction on October 22.
Traders also said the shilling was expected to keep a strengthening bias due tightening shilling liquidity.
The central bank said on Thursday it planned to mop 5 billion shillings using term auction deposits and seven-day repurchase agreements. It also said it would be in the market between 1100 and 1130 GMT for a four-day late repo.
The bank often soaks up excess shilling liquidity, an action that partly supports the local currency by making it more expensive to hold dollars.
"I think the mop-ups are helping, and the infrastructure bond inflows are also helping to keep the shilling on a strengthening bias," Sheikh Mehran, head of trading at I&M Bank.
Traders said they expect the shilling to trade in the 88.80 to 89.50 range to the greenback in coming days.
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