Shilling seen weaker unless CBK intervenes

The shilling was marginally weaker early yesterday, with traders expecting the Central Bank to sell dollars to support the currency if it continues easing. At the opening of trade, commercial banks posted the shilling at 90.35/45 amid thin volumes, weaker than Monday's close of 90.30/40 to the dollar.

"We are trading near 90.45 and from past trend we have seen (the central bank) intervene when we get to that level. The market is keen to see whether they will intervene," said a trader at a Nairobi-based commercial bank. Traders said the bank sold dollars last Wednesday to defend the local currency when the shilling neared the 90.50 level. The local currency has lost 4.8 per cent against the dollar this year despite frequent interventions by the Central Bank to prop up the shilling, including dollar sales. The bank has also been regularly mopping up excess money market liquidity, which lends support to the local currency.