NAIROBI: The Kenyan shilling held steady on Thursday, supported by companies holding on to their local currency as they pay their taxes, while month-end importer demand for dollars cooled off.
The shilling was posted at 85.90/86.10 per dollar at 0758 GMT, barely changed from Wednesday's close of 85.95/86.15.
"(Dollar) demand is not really there because most clients are pretty short on the shilling side as they pay VAT and corporate tax," said Ignatius Chicha, head of markets at Citibank Kenya.
The shilling is under pressure and has lost 1.1 percent this month, partly due to investors buying dollars as they exit Kenyan shares in a broad pullback from emerging markets after the US Federal Reserve signalled plans to reduce its stimulus programme.
A proposal to reintroduce a tax on capital gains and a huge budget deficit has also caused jitters among investors who expect interest rates to rise, stifling returns on equities.
Kenya's main share index is down 7.75 percent since the start of June, driven by profit-taking. It is still up 11 percent on the year.
Currency traders said the market was also gearing up for the central bank's rate decision on July 9.
The Central Bank of Kenya cut its key lending rate by a bigger-than-expected 100 basis points to 8.50 percent in May and market players said a bearish local currency and inflationary risks might point to a hold this time around.
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