NAIROBI: The Kenyan shilling was stable against the dollar on Friday, and traders said the local currency would remain range-bound in the coming week, with inflows from tea exports expected to offset poor demand for the US currency.
AT 0715 GMT, commercial banks posted the shilling at 84.85/85.05 per dollar, unchanged from Thursday's close.
"It (the shilling) will be range-bound for now. The only major news will be the Monetary Policy Committee (MPC) meeting and we might see (weakness) on the shilling towards the decision," said Julius Kiriinya, a trader at African Banking Corporation.
Traders said they were wary due to prospects of another interest rate cut to shore up the economy when policymakers meet in November, given that year-on-year inflation fell to 5.32 percent in September from 6.09 percent in August.
A rate cut would put pressure on the shilling, traders said.
Policymakers slashed the benchmark lending rate last month by a record 350 basis points to 13 percent.
Traders said inflows from tea during the country's weekly auction would counter importers' demand for dollars next week. Kenya is the world's biggest producer of black tea, and the crop is the country's top foreign exchange earner.
"We expect the normal agricultural inflows which will help support the shilling on any (dollar) demand we see," said Kiriinya.
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