NAIROBI: The Kenyan shilling eased against the dollar on Wednesday, hurt by demand from importers, and traders said the central bank was ready to intervene to prevent further weakness.
At 0750 GMT, commercial banks posted the shilling at 87.05/15 against the dollar, close to a two-month low and weaker than Tuesday's close of 86.80/7.00 per dollar.
Earlier in the session, the shilling touched 87.10 to the dollar, just off 87.20 which it last hit on September 27.
"The shilling remains under pressure because we are still seeing demand (for dollars), especially with a lot of the corporations looking to do a lot of their buying between now and mid-December," said Peter Mutuku, head of corporate dealing at Bank of Africa.
The shilling weakened past its key support level of 86.50 to the dollar last week, hit by the surge in dollar demand which was also accompanied by improved liquidity in money markets. This makes it slightly cheaper for banks to hold dollars.
However, traders said the shilling could receive support from the central bank if it chooses to pump dollars into the market to shield it from further weakening.
One senior trader who asked not be named said the central bank had made a round robin of calls to banks in the previous session to check why the shilling was weakening, an indication that they were willing to intervene if need be.
Technical analysis of the 14-day and 50-day weighted moving averages showed the shilling was expected to remain on a weakening path in the near term.
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