NAIROBI: The Kenyan shilling held steady on Friday, and traders said barring any new factors, it was expected to maintain the trend in the coming days.
At 0837 GMT, commercial banks quoted the shilling at 86.40/60 to the dollar, compared with Thursday's close of 86.45/55.
"It's continued to trade within a tight band of 86.20 to 86.50. We start seeing (dollar) supply at 86.50 to 86.55 levels and there is pretty heavy demand lined up at lower levels 86.30 to 86.40. So it's really range-bound," said Duncan Kinuthia, head of trading at Commercial Bank of Africa.
"The fact that there was no change in the monetary policy stand, we expect to continue within these ranges."
On Tuesday, the central bank of Kenya held its benchmark lending rate at 8.50 percent for the fifth policy meeting in a row.
On Friday, the central bank said it planned to mop up 9 billion shillings ($103.89 million) in excess liquidity from the money markets. The bank has so far absorbed a total of 20 billion shillings in two previous repos this week.
"There is enough liquidity in the money markets. Initially we expected mild depreciation but it looks like there is still key support at the 86.60 level," Kinuthia said.
Mopping up excess liquidity helps the shilling by making it costlier to hold onto long dollar positions.
But some traders have said the effect of excess liquidity in the market on weakening the shilling would be limited, since the yields on holding onto shillings overnight was still relatively higher than holding onto the dollar.
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