Kenyan shilling weakens on dollar demand by importers

The Kenyan shilling weakened on Wednesday as importers filled their dollar requirements ahead of time due to worries that the currency could slide further.

 At 0700 GMT, commercial banks posted the shilling at 96.75/85, down from Tuesday's closing rate of 96.55/65.

Traders said the shilling could drop to 97.00 in the next few days, barring an intervention by the central bank.

Importers routinely buy dollars towards the end of each month to meet their monthly obligations.

"As the currency keeps on approaching this 97 level, people buy in advance," said a trader at a commercial bank.

Last week, the shilling weakened to its lowest point since Nov. 2011, under pressure from rising dollar demand against dwindling supply of hard currency, triggering the sale of an unspecified amount of dollars by the central bank on May 12.

"There is plenty of unmet demand while supply is quite fickle. This demand has been partly panic-driven," said the trader, referring to dollar buying.

A gaping current account deficit, rising imports and a drop in earnings from tourism caused by frequent attacks by Islamist militants have all put pressure on the shilling.