Shilling eases slightly on importer dollar demand

The shilling weakened yesterday, dragged lower by growing demand for dollars as importers seek to meet their end month obligations ahead of time.

At the opening of business, commercial banks posted the shilling at 97.10/20 per dollar, slightly down from Thursday’s close of 97.00/10. “We are approaching end month so there is genuine demand from importers,” said a trader with a commercial bank.

Traders said the surge in demand had curbed the impact of tight liquidity in the money markets, which was expected to offer support to the currency, by making it slightly more expensive to bet against the shilling. The weighted average interest rate on the overnight borrowing market for banks rose above 11 per cent this week, indicating there was a liquidity squeeze. — Reuters