NAIROBI: Kenya's shilling weakened on Tuesday, weighed down by corporate demand for dollars, while the benchmark share index eked out meagre gains as investors regrouped following losses in the previous session.
At the 1300 GMT close of trade, leading commercial banks posted the shilling at 90.90/91.00, lower than Monday's close of 90.80/90.
The Kenyan currency weakened late on Monday as importers resumed business after the holidays.
"Dollar demand from yesterday persisted today and it is specifically from the oil sector," said Nahashon Mungai, a trader at KCB Bank. "The market looks poised to breach the 91.000 level barring any intervention by the CBK (Central Bank of Kenya)."
The shilling weakened steadily last year in part because of a downturn in tourism following a series of Islamist militant attacks. Tourists are a major source of dollars and other hard currencies for the east African nation.
Sustained corporate demand for dollars, jitters across emerging markets and thin dollar inflows into Kenya were all putting pressure on the shilling, said Duncan Kinuthia, head of trading at Commercial Bank of Africa.
"A breach of 91.00 could open up towards 91.50," Kinuthia said. "General weakness will remain. I don't see anything supporting a strong shilling for the time being."
In the stock market, the benchmark NSE-20 share index edged up 0.17 percent to close at 5,098.49 points.
Market participants said the gains reflected a correction after the index dropped 0.54 percent in the previous session due to concerns over a new capital gains tax.
In the debt market, bonds worth 800 million shillings were traded, up from 571 million shillings that changed hands on Monday.
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