NAIROBI: The Kenyan shilling hit its lowest level since January 2012 on Monday, weighed down by concerns that hard currency inflows would be hit by a slump in tourism.
At the 1300 GMT close of trade, commercial banks posted the shilling at 88.65/75 per dollar, weaker than Friday's close of 88.25/35.
Concerns over dollar inflows have grown in recent months, in large part due to falling business in the key tourist industry, which has been hurt by a number of Islamist militant attacks that have scared away visitors from beach resorts.
Commercial Bank of Africa trader John Njenga said dollar inflows from tea exports and non-governmental organisations (NGOs) had also been weak.
"It is the end of the month so (dollar) orders have started building up," said a trader at a leading commercial bank, highlighting worries about tourism revenues. "There was also an element of panic-buying."
Firms, especially importers, seek dollars at the end of the month to meet financial obligations to suppliers.
Traders said the shilling could head to the 89.00 per dollar level if it convincingly breaks past 88.80 in the next few days.
In the stock market, the benchmark NSE-20 share index eked out meagre gains, adding 5.63 points to close at 5,033.69 points.
Kenya Airways, which lost 10 percent last week after it suspended flights to Sierra Leone and Liberia over the Ebola outbreak in west Africa, regained some ground, rising 1.6 percent to close at 9.40 shillings per share.
"It was a very knee jerk sell-off reaction that we saw (last week). It got a bit overextended and I expect the bounce to go a little bit further," said Aly Khan Satchu, an independent trader and analyst.
In the debt market, bonds worth 2.5 billion shillings (US$28.2 million) were traded, up from a volume of 1.9 billion shillings traded on Friday.
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