NAIROBI: Kenya's shilling held steady early on Monday but traders said they expected it would strengthen in coming weeks as Kenyans abroad sent dollars back to their families during the holiday season.
The shilling was 90.50/70 to the dollar at 0700 GMT, marginally stronger than the 90.55/65 at the close of trade on Thursday, when the central bank sold dollars to help pull the local currency off a 3-year low earlier in the session.
Kenyan markets were closed on Friday for a national holiday.
"We will start to see money flowing in from the diaspora for the holidays - people sending money home to their families - and that will support the local currency," said Duncan Kinuthia, head of trading at Commercial Bank of Africa.
Money sent by Kenyans living abroad -- or remittances -- is one of the country's main sources of foreign exchange.
Kenya received remittances worth $1.06 billion in the first nine months of this year, compared with $951 million in the same period in 2013, according to central bank data.
A second trader at a Nairobi-based commercial Bank said the security situation in Kenya could still hit the shilling.
A fall in tourist numbers following a spate of Islamist attacks - another key source of hard currency inflows for east Africa's biggest economy - has put pressure on the shilling.
"Of course if there is any security risk, that will impact the shilling," he said. "That has been the challenge for the year," he said.
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