NAIROBI: Kenya's shilling weakened in early trade on Tuesday, driven by demand for dollars from importers and manufacturers.
By 0718 GMT, the shilling was trading at 90.05/15 to the US currency, lower than Monday's close of 89.80/90.
"We have weakened in early morning trade on the back of corporate demand," said Sheikh Mehran, head of trading at I&M Bank. "It is a correction from last week's central bank move."
The shilling had strengthened to below the 90-level after the central bank sold dollars on Friday to support the shilling, helping lift the currency from three-year lows of around 90.30.
Mehran said he expected the central bank to watch for speculative trading against the shilling, rather than demand driven by real corporate need for dollars. "If it is a speculative move ... they will surely come in again," he said.
The central bank does not usually comment when it intervenes with dollar sales but has previously said it has enough reserves to cushion the foreign exchange market against shocks.
Traders said the currency was likely to trade in a range of roughly 89.80 to 90.30 in the next few days, with companies expected to meet their need for dollars by ordering on dips.
Comments
Comments are closed for this article.