NAIROBI: The Kenyan shilling weakened against the dollar on Tuesday but traders said they expected the central bank would seek to support it at 88.20 and it would trade in tight band over the next few days.
The central bank insists it has no particular level it prefers for the shilling, but it has acted aggressively to stop it from falling beyond 88.20 in recent weeks.
At 0720 GMT, commercial banks posted the shilling at 87.65/75 per dollar, slightly weaker from Monday's close of 87.55/65, but still within its recent range.
"Going forward we will probably trade in a very narrow range because 88.20 will be a hard nut to crack due to the central bank's intervention and there is demand (for dollars) at around 87.50," said Chris Muiga, a trader at National Bank.
The central bank has regularly intervened to mop up shilling liquidity via repurchase agreements and other instruments, and in recent weeks traders said it had also sold dollars.
Traders have said they are also waiting for the budget, due to be presented to parliament on Thursday, for a broader guide to the economy's direction.
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