NAIROBI: The Kenyan shilling broke a six-day rally against the dollar on Thursday, weighed down by commercial banks taking profits and dollar demand from importers in the oil sector, traders said.
At 0651 GMT, commercial banks quoted the shilling at 83.65/85 per dollar, slightly weaker than Wednesday's close of 83.55/75.
"We've seen a bit of profit taking by banks and corporates showing a bit of interest at these levels, especially from the oil guys," said Dickson Magecha, a trader at Standard chartered Bank.
The shilling had gained 2.2 percent over the last six sessions, helped greatly by an aggressive tightening of liquidity by the central bank using longer tenure repurchase agreements (repos) and a build-up of foreign exchange reserves.
Traders said the shilling could, however, get support from high interest rates in the money market and greater risk appetite globally for frontier and emerging markets.
The weighted average interbank interest rate rose to 17.9 percent on Wednesday from 17 percent on Tuesday as commercial banks competed for a limited supply of shillings available.
"The sharp move higher in euro/dollar we think is also contributing, at a time when dollar/shilling is seen as highly correlated to the pair," said Citibank in a note to its clients.
Magecha forecast the shilling would trade in the 83.00-83.80 range for the rest of the week.
Comments
Comments are closed for this article.