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Kenyan Shilling Seen Firmer On Tea Sector Dollar Inflows
27/08/2013
NAIROBI (Reuters) - The Kenyan shilling was steady on Tuesday, underpinned by high yields on local debt, with traders saying it could firm slightly on dollar conversions by tea exporters.
By 0951 GMT, commercial banks quoted the shilling at 87.45/65, barely changed from Monday's close of 87.50/70.
A trader at one commercial bank in Nairobi said end-of-month importer demand for dollars was being offset by foreign investors buying into local debt to lock in the high yields on offer.
Yields on Kenyan debt rose steadily for eight straight weeks due to tight shilling supply in the market, but started falling at auctions last week after liquidity eased.
"The market is (also) watching out for the central bank's rate setting meeting in a week's time for clear direction," the trader said.
The central bank is set to hold its monetary policy meeting on September 3, which traders expect will hold the key rate decision at 8.50 percent to give time for previous rate cuts to filter through the economy.
Bank of Africa said in a daily note that the shilling could get some support from tea exporters selling dollars after the auction on Tuesday. Tea is Kenya's leading hard currency earner.
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