NAIROBI: Kenya's shilling weakened in early trade on Thursday on demand for dollars from energy and telecoms firms, driving the currency close to levels where the central bank intervened with support last week.
By 0809 GMT, the shilling was trading at 89.10/30, compared with Wednesday's close of 89.00/20. A week ago, the central bank sold dollars to help the currency when it fell to around 89.50.
"We are still slowly sliding. We see continued (dollar) demand from the same sectors," said Duncan Kinuthia, head of trading at Commercial Bank of Africa, adding telecoms and energy firms usually sought dollars to meet payments for suppliers and other obligations at the end of each month.
"I still expect the shilling to maintain a bearish tone," he said. "I think the line in the sand is 89.50."
The central bank has not indicated if it has any plans to intervene again nor suggested any level that might prompt action.
Although 89.50 is seen as a possible trigger, traders said the central bank would likely watch to see if any gradual weakening became a rout and also whether it assessed a move lower was due to fundamental dollar shortages or speculation.
The bank has said it had the necessary reserves to deal with any shocks to the economy.
Pressure has been building on the shilling in part because of a sharp downturn in tourism, a major hard currency earner that has been hit because of militant attacks particularly along the popular coast that have sent tourists packing.
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