NAIROBI: Kenya's shilling dipped 0.2 percent in early trading on Monday before recouping the losses as some commercial banks booked profit on long dollar positions, a senior currency trader said.
At 0700 GMT leading commercial lenders quoted the shilling at 86.85/95 to the dollar, matching Friday's closing price.
The local currency has held its ground against the greenback, down 0.3 percent in the year to date, supported by the central bank's stance of draining excess liquidity from the money market.
"The fact that central bank is still keeping the money market tight is supporting the shilling," the senior trader said. "We're not seeing that much (dollar) demand and whatever is coming in is easily being met by supply from the agricultural sector."
By absorbing liquidity, the central bank makes it more expensive to hold long dollar positions, thereby shoring up the shilling.
The weighted average yield on the overnight rate on May 2 was 8.42 percent, above April's low of 6.73 percent on April 9.
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