* Shilling targets 87.00 vs dollar * Oil importers' dollar demand weighs (Recasts with record low, new quotes) By Beatrice Gachenge and Kevin Mwanza NAIROBI, May 18 (Reuters) - The Kenyan shilling KES= sank to a record low of 86.90 against the dollar on Wednesday, passing its previous low of 86.77, hit a day earlier, after the central bank made its sixth hard currency purchase since May 10. The Central Bank of Kenya (CBK) purchased 3 million euros at an average price of 123.9 shillings per euro, while also mopping up 500 million shillings via repurchase agreements CBK04. It has bought 25 million euros since early last week. Market players said there was support for the dollar at 87.00. At 1020 GMT commercial banks quoted the shilling trading at 86.82. Market players said the central bank's actions were sending conflicting messages to the market, fuelling the weakening effect of energy sector demand for dollars. "This is not something CBK should be doing. They are hammering the shilling when it is already at its lowest," said Andlip Mohamed, senior trader at I&M Bank "We are importing inflation. Importers are panicking and there will be huge demand for the dollar, weakening the shilling further," said Mohamed. While buying euros, apparently to reinforce its foreign exchange reserves, the central bank has also mopped up 4.5 billion shillings since May 11. "87.00 is very possible. After that the next level is 87.50," said Solomon Alubala, head of trading at Co-operative Bank. The shilling's plight is feeding speculation that fuel prices will rise again. The pump price of fuel in Kenya has soared in recent months, helping push inflation upwards for the sixth straight month in April to 12.05 percent. [ID:nLDE73S0MR]

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