NAIROBI: The Kenyan shilling stabilised on Monday after the central bank sold dollars and curbed losses following the local currency's tumble to fresh three-year lows, traders said.
The currency ended the day at 94.25/35 to the dollar, from Friday's close of 94.20/30, near lows last seen in November 2011. The shilling had eased to 94.40/50 when the bank intervened.
"They are not trying to defend any level, they are just trying to smooth it out," said a trader at one commercial bank.
It was the third time this month that the Central Bank of Kenya (CBK) had sold dollars to prop up the shilling. The bank last sold dollars on April 21 and before that on April 7.
The shilling, down 4.2 percent against the dollar this year, has been hit by a fall in foreign exchange revenues from tourism after a number of militant attacks scared visitors away. Uneven rainfall has also hit the horticulture sector, another top foreign exchange earner.
Traders said the shilling is likely to remain under pressure in coming weeks, even if the central bank intervened to cushion local currency weakness.
Martin Runo, a trader at Chase Bank, said hard currency inflows remain weak and the shilling is likely to continue trading on the back foot due to traditional end-month dollar demand from firms buying dollars to cover bill payments.
"As much as (the central bank) has slowed down the rapid depreciation of the shilling, we are still seeing a weak sentiment on the shilling."
On the Nairobi Securities Exchange, the main NSE-20 Share Index fell 4.81 points, or 0.1 percent, to 5,056.27 points.
On the secondary market, government bonds valued at 1.1 billion shillings ($11.68 million) were traded, up from 593.1 million on Friday.
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