NAIROBI: The Kenyan shilling was flat at a three-year low on Thursday, with traders expecting the currency to continue weakening if the central bank does not intervene to prop up the shilling.
At 0730 GMT, commercial banks posted the shilling at 90.05/15 to the dollar, unchanged from Wednesday's close, which marked its lowest level since November 2011.
"Not much change is expected today," said a trader at a major commercial bank in Kenya.
"The expectation is without any intervention, or other supply that may come into the market, we'll just see a continued weakening of the shilling."
The central bank has in the past sold dollars to support the local currency when the shilling touched 89.50 levels and most traders were surprised when the bank did not do the same as the currency broke through the 90 mark.
However, the central bank has regularly drained excess liquidity from the money markets in recent months, making it relatively costlier to hold on to long dollar positions, which helps strengthen the shilling.
On Wednesday it sought to mop up 8 billion shillings ($88.84 million) in excess liquidity.
The shilling has weakened by about 4.1 percent against the dollar this year, mainly due to a slump in hard currency inflows from tourism following a spate of attacks by Islamic militants.
Inflows of dollars from tea exports have also dwindled owing to weaker prices caused by a global glut of the commodity.
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