NAIROBI (Reuters) – Kenya’s shilling weakened close to its all-time low in early trading on Tuesday, weighed down by corporate dollar demand and the U.S. currency’s strength on global markets, traders said.
At 0722 GMT, the shilling traded at 106.60/70 close to the low of about 107, compared with 106.15/35 on Monday’s close.
“There is sustained corporate demand and inflows are not significant,” said one trader at a Nairobi-based commercial bank.
Traders said they were watching to see if the central bank would return to the market to sell dollars like it did on Monday, when the shilling touched 106.20/40.
“Intervention could be on the cards if it hits an all-time low, but between now and then I would say it will be inching very slowly upwards,” another trader said, referring to the shilling weakening.
Kenya’s central bank has in the past few months occasionally intervened to support the currency by selling dollars. It also regularly mops up excess liquidity.
The bank also said on Tuesday it planned to mop up 11 billion shillings ($103.43 million) in excess liquidity from the money markets.
The mop-ups make it costly to hold onto dollars, which in turn supports the shilling.