NAIROBI: Kenya's shilling fell to its lowest in close to three years and seven months on Tuesday, undermined by dollar demand from the energy and manufacturing sectors.
Shares fell slightly.
At the close of trade, commercial banks quoted the shilling at 98.35/45 to the dollar, down from Monday's close of 97.85/95. The shilling last traded at these levels in Nov. 2011.
"Demand is from energy and manufacturing. But I expect it not to weaken further. I think we should see some correction," said a trader at one commercial bank.
John Muli, a trader at African Banking Corporation, said pressure on the shilling was made more acute by a sluggish supply of dollars.
"On the dollar, there are still no inflows," Muli said.
This year, the shilling has been undermined by a firmer dollar, lower hard currency receipts due to a slump in tourism, as well as a growing current account deficit driven by demand for imports like capital goods.
In the stock exchange, the benchmark NSE-20 share index shed 5.17 points to close at 4,853.44 points.
The index peaked in March but has since turned defensive mainly due to the weakening currency which poses risks for foreign exchange investors.
Frontier markets investors abroad have also re-allocated their cash to the Nigerian market after Africa's biggest economy held a peaceful general election at the end of March.
In the debt market, bonds worth 2 billion shillings ($20 million) down were traded, down from a volume of 2.3 billion shillings in the previous session.
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