Kenya shilling holds steady, seen in a range

Fri 3 Oct 2008, 10:11 GMT
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NAIROBI (Reuters) - Kenya's shilling held its ground against the dollar on Friday and dealers said it is likely to stay in a narrow range in coming sessions.

At 1000 GMT, commercial banks posted the unit at 72.95/73.05 against the greenback, the same level as Thursday's close.

Dealers said the unit was likely to trade between 72.65-73.50 in the days ahead.

"Right now everything looks evenly matched between supply and demand. It will remain range-bound in the coming sessions," said Citibank's Chris Muthoka.

Bryan Muigai, chair of ACI-Kenya, an association of foreign currency dealers, said the local unit was stuck in a tight band in spite of an active session.

"I see it (shilling) continuing to be boxed in that tight range until the market sees the true (dollar) flows, and then from there we will be able to decide if it is upwards or down," he said.

The local unit has ceded a lot of ground to the dollar in recent weeks due to high importer demand for dollars that was unmatched by supply.

In a country assessment report released on Thursday, the International Monetary Fund said it was important for the government to monitor the exchange rates due to a widening current account deficit.

Kenya's current account deficit more than doubled to $1.373 billion in the year to May from $572 million in the same period last year, according to central bank statistics released in early September.

Jean-Louis Kayitenkore
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