NAIROBI: The Kenyan shilling weakened on Thursday, as banks opted to give up on bets of more dollar weakness after the Kenyan central bank upped supplies of shillings earlier this week.
At 0755 GMT, commercial banks posted the shilling at 86.50/60 per dollar, down from Wednesday's closing rate of 86.35/45. Traders said it could slide more if it stayed below a key level.
"If it convincingly breaches the 86.50 level and we end the week below that, it could weaken towards 87.00," said Ignatius Chicha, treasurer at Citibank Kenya.
The shilling fell past its support of 85.85-86.10 late on Tuesday after the central bank pumped liquidity into money markets, easing a squeeze that had sent the overnight borrowing rate on the interbank market higher.
The rate sunk to 10.4167 percent on Wednesday from 11.8444 percent in the previous session, allowing banks to cover their short dollar positions.
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