Shilling steady as CBK mop ups offset market liquidity

Kenya: The shilling was flat yesterday after liquidity mop ups by the Central Bank offset increased local currency liquidity but traders said the unit could still weaken on pent-up dollar demand. At the opening of business the shilling was trading at 91.55/65 to the dollar, the same as the previous day's close.

 "That has slowed down the pace of the shilling weakening," said a trader at a major commercial bank in Kenya, referring to the aggressive mopping up by the Central Bank. Central Bank has mopped up a total of Sh31 billion in excess liquidity from the money markets so far this week.

Monday was the first time it has conducted any mop ups since January 21. Absorbing liquidity makes it costlier to hold dollars, which supports the shilling.