NAIROBI (Reuters) – The Kenyan shilling weakened against the dollar to a near five-year low on Tuesday due to importer demand and excess liquidity in the money markets, traders said.
At 0747 GMT, commercial banks quoted the shilling at 104.25/35 per dollar, compared with 104.05/15 at Monday’s close. The last time the shilling traded at these levels was on Oct.2 2015, when it touched 104.40/50, Refinitiv data showed.
“The reason for the weakening is liquidity-driven, though we are now at the end of the month and increased end month dollar demand could also come into play,” said a senior trader from a commercial bank.
Last week, central bank governor Patrick Njoroge dismissed the market’s concerns about the impact of graft charges against the finance minister and attributed the week’s fall in the currency to seasonal demand for dollars and to excess liquidity in the money markets.
Reporting by John Ndiso; writing by Omar Mohammed; editing by George Obulutsa, William Maclean