Kenyan shilling seen weaker on dollar demand by energy sector

Nairobi, Kenya: Kenya's shilling was flat at three-year lows on Friday but traders were anticipating a weakening bias for the local currency with energy companies seeking to buy dollars. At 0830 GMT, commercial banks quoted the shilling at 93.40/50, unchanged from Thursday's close and stuck at levels last seen in November 2011. "We maintain a fairly negative shilling outlook on account of mid-month corporate demand," said Joshua Anene, a trader at Commercial Bank of Africa. "Also, inflows are subdued at the moment." The strength of the U.S. dollar globally has put pressure on the currency, while tourism and horticulture, Kenya's main foreign currency earners, have been floundering. Poor rains have hit the agriculture sector hard, leading to depressed tea and coffee earnings. A spate of Islamic attacks, including an assault on a northeastern university earlier this month where 148 people were killed, has scared off potential visitors to Kenya's sandy beaches and game reserves, hoteliers say. Sheikh Mehran, head of trading at I&M Bank, said he expected the shilling to stay rangebound at the 93.20-93.80 level. "The only thing that could slow down the shilling's slide is a central bank intervention," he said. On Tuesday, the bank said it was monitoring the foreign exchange market and had enough reserves "to cushion the exchange rate against these short-term shocks and volatility."

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