The Kenyan shilling weakened on Wednesday on dollar buying by a few companies before a two-day break for the Christmas holiday. The foreign currency market closed earlier than usual at 0900 GMT due to the upcoming holiday, with commercial banks quoting the shilling at 90.55/65 to the dollar, weaker than Tuesday's close of 90.45/55. Nahashon Mungai, a trader at Kenya Commercial Bank, said the local currency fell on pent-up dollar demand that had started on Tuesday and trickled into the market again on Wednesday.
"There was a bit of dollar demand because of yesterday's demand and last minute covering of positions," he said. Mungai said some traders were also buying dollars to cover their positions before the Christmas holiday. Markets will be closed on Thursday and Friday and will re-open on Monday.
Traders say most companies and non-governmental organisations which trade hard currency for their daily operations have closed down for the year. "The shilling usually loses in the last two weeks of the year" as firms that close their books on December 31 buy dollars to strengthen their foreign currency positions, said a trader at another commercial bank in Kenya.