NAIROBI: The Kenyan shilling was slightly weakened against the dollar on Wednesday, with traders saying they were awaiting the outcome of a Treasury bill auction to determine the direction the currency might take. Stocks were up.
At the 1330 GMT close of trade, commercial banks posted the shilling at 103.35/45, after Tuesday's close of 103.20/30.
"It's pretty stable. Both demand and supply are well-matched," said a trader with a leading commercial bank.
Kenya's central bank will auction 182- and 364-day bills on Wednesday and 91-day bills on Thursday.
"If (yields) remain stable, the shilling will remain range-bound. If it goes down, the shilling will weaken," the trader said.
The shilling firmed to its highest level since mid-August on Tuesday, having benefited from tight liquidity in the money markets, which sent the overnight lending rate for banks to a high of 28 percent last week.
The rate fell to 17.2604 percent on Tuesday from 19.5562 percent the previous day, pointing to the improving conditions.
Good liquidity usually makes it slightly cheaper for banks to build up dollar positions and the central bank has been mopping up the excess liquidity to stave off any pressure on the shilling.
The Nairobi Securities Exchange's main NSE-20 Share Index was up 7.39 points to close at 4071.56.
On the secondary market, government bonds valued at 1 billion shillings ($9.69 million) were traded, up from 809 million shillings on Tuesday.
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