* Shilling hit all-time low of 90.85 on Thursday
* Finmin comment on shilling has little effect - traders
NAIROBI, June 17 (Reuters) - The Kenyan shilling KES=
pulled back from all-time low on Friday thanks to tight control
on supplies of the currency, but traders said it would remain
volatile after a series of jolts to the market.
Traders said comments by Kenya's Finance Minister that the
Treasury was closely watching the shilling but would not
intervene had had no effect on the currency. [ID:LDE75G0DB]
Analysts say Kenya's central bank may need to do more than
increase interest rates to counter a vicious inflation shock
that has driven a 10 percent slide in the shilling this year.
They say a pause in controversial purchases of hard currency
from the market may be needed to turn sentiment around in the
short term. [ID:nLDE7580LQ]
At 0720 GMT, the shilling was quoted at 89.60/80 against the
dollar, slightly stronger than Thursday's close of 89.90/90.00.
It touched a record low of 90.85 in the previous session.
"We expect today to be slow on liquidity issues. At this
level the prices are a bit restrictive and only clients that
must trade will be in the market," said Jeremiah Kendagor, head
of foreign exchange at Kenya Commercial Bank.
"We are watching to see whether central bank might want to
talk about interventions. That could change the scene."
The Central Bank of Kenya sought to mop up shillings through
repurchase agreements twice this week but it failed to achieve
its aim after one did not receive bids from commercial banks and
the other central bank did not accept any of the bids. CBK04
Some traders said the central bank was sending mixed signals
to the market by mopping up shillings through repos, but still
lending out more money through the overnight window.
The shilling fell 2.48 percent to its intra-day low of
90.95/91.05 before clawing back some losses to close at
89.90/90.00 on Thursday.
"There is a 50 cent spread to the shilling today and so we
expect it be a bit quiet today," said Bhavin Chandaria, a trader
at Imperial Bank.
