Nairobi - Kenya's shilling weakened on Wednesday as oil companies bought dollars, taking advantage of a strengthening in the local currency on Tuesday after a central bank dollar sale.
At 07h51 GMT, commercial banks quoted the shilling at 102.00/20 to the dollar, compared with Tuesday's close of 101.45/65.
Traders said the shilling had gained after the bank sold an undisclosed amount of dollars on Monday and Tuesday to counter a fall in the shilling to a new three-and-a-half-year low of 103.85/95 to the dollar.
“I have seen oil companies buying (dollars). They are taking advantage. They had budgeted at a slightly higher rate of 102, 103. So the current rates are quite appealing for any buyer,” a trader at one commercial bank said.
The shilling has been on a weakening trend this year, hurt by a widening current account deficit and a slump in export proceeds, especially from the tourism sector, following a spate of attacks by Somali Islamists.
Traders said they forecast the shilling, which has lost 11 percent against the dollar so far this year, to trade in the 101.50 to 102.50 range in the next few days.
“At these levels, there is still quite a bit of demand from corporates. Yesterday, the energy sector was quite prominent,” a trader at a second commercial bank said.
Technical analysis of the 14-day and 50-day weighted moving averages shows the shilling is expected to stay on a weakening trend in the near term.
Reuters