NAIROBI: The Kenyan shilling held steady against the dollar on Thursday, but traders said the local currency could weaken in coming days on growing greenback demand from importers.
At 0733 GMT, commercial banks quoted the shilling at 85.65/75 to the dollar, barely changed from Wednesday's close of 85.60/80.
"The bias is for the shilling to weaken after the central bank cut its interest rate. If banks lower their base lending rates too, it may feed into the import bill as importers access credit," said a trader at one commercial bank.
Policymakers embarked on an easing cycle in July, slashing the benchmark central bank rate by 700 basis points to 11 percent, to support economic growth.
The central bank has also regularly soaked up excess liquidity from the market this year by using repurchase agreements to stabilise the currency, which is down 0.6 percent year-to-date.
"We are waiting to see how much the central bank will seek to tighten liquidity. That might give the shilling some relief," added Ignatius Chicha, head of Markets at CitiBank.
At the 182-day Treasury bills sale on Wednesday, the bank received bids worth 14.46 billion shillings ($168.5 million) for the 4 billion shillings worth of debt on offer, and accepted bids worth 11.41 billion shillings.
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