Kenyan shilling under pressure from demand for dollars

The shilling inched lower yesterday, weighed down by demand for dollars by importers. At the opening of trade, commercial banks posted the currency at 96.45/55 per dollar, slightly down from the previous day’s closing rate of 96.20/40.

“It is just normal demand that is picking up on the corporate side, bearing in mind we have started approaching end month,” said Robert Gatobu, a trader at Bank of Africa.

He said the shilling could weaken past the 96.50 level in the next few days as firms finish paying local taxes this week, enabling them to drive up demand for the dollar.

The shilling has broken through a series of fresh lows since November 2011 this month, mainly due to demand for dollars, amid a steep downturn in tourism caused by insecurity. Tourism is an important source of hard currency.