NAIROBI: The Kenyan shilling held steady against the dollar on Thursday, supported by an uptick in yields on the debt market which traders said could encourage banks to hold the local currency.
At 0649 GMT, commercial banks quoted the shilling at 84.75/95 per dollar, barely change from Wednesday's close of 84.70/90.
"Turning yields should support the local unit from an interest rate perspective," said Dickson Magecha, a trader at Standard Chartered Bank.
"Higher yields would drain some liquidity and release pressure on the central banks mop up activity. We could also see an up tick in the interbank rate," he added.
The weighted average interbank rate inched up to 6.7 percent on Wednesday from 6.6 percent the previous session.
On the debt market on Wednesday, the weighted average yield on the 182-day Treasury bills rose for the first time since July 25, to 9.625 percent from 8.993 percent last week.
Further, a new 15-year bond also on sale fell a less-than-expected 30 basis points to 12.089 percent.
On Wednesday, market players had held square position as they waited to see what direction government securities would take at the auctions, Bank of Africa said in a daily report.
Traders said they, however, expected the shilling to come under pressure from oil sector importers buying a globally stronger dollar.
"We're keeping an eye out for the oil sector orders," Magecha said.
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