NAIROBI: The Kenyan shilling drifted in a narrow range on Friday as some commercial banks bought dollars to cover short positions ahead of the weekend, trader said.
By 0830 GMT, commercial banks were quoting the shilling at 86.60/70 to the dollar, compared with Thursday's close of 86.55/65.
"Trading volumes are low.
There will be a bit of covering of interbank positions, so that puts a bit of pressure on the shilling," said Kenya Commercial Bank trader Nahashon Mungai.
The central bank said on Friday it was seeking to take out 12 billion Kenyan shillings from the money market to drain excess liquidity.
The bank has frequently absorbed liquidity over the past few weeks after overnight borrowing rates tumbled, making it a bit cheaper for banks to fund long dollar positions, which in turn put pressure on the shilling.
On Thursday, the central bank mopped up 8.45 billion shillings using seven-day repurchase agreements at a weighted average rate of 8.36 percent. It had originally sought 6.2 billion shillings.
Traders forecast the shilling would trade in a narrow band of 86.40 to 86.80 range in coming days.
"It's just interbank activity interbank driven. I haven't seen much in terms of corporate activity." said a senior trader at another commercial bank.
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