NAIROBI, Sept 19 (Reuters) - Kenya's shilling
weakened against the dollar on Monday as manufacturing importers
bought greenbacks and traders said the market was keeping an eye
on central bank for any sale of hard currency after it said it
would defend the shilling.
Central Bank of Kenya (CBK) raised its benchmark lending
rate by a record 75 basis points to 7.0 percent at
an emergency rate-setting meeting last week, a move seen easing
a crisis of confidence in Kenyan markets.
The bank has sold dollars twice in the last two weeks -- the
first dollar sales in two years -- after the shilling weakened
to touch a new record low of 95.65 on Sept. 12.
At 0621 GMT, commercial banks quoted the shilling at
95.30/50, weaker than Friday's close of 94.80/95.10.
"The shilling is projected to weaken on (importers) dollar
demand. The only thing that would help it strengthen is a CBK
intervention ... by selling dollars," said a trader with one
commercial bank.
"But with the reserve coming down, they don't have the fire
power."
Kenya's foreign exchange reserves fell last week to $3.836
billion, or 3.53 months-worth of import cover, below a targeted
four months.
Market players said the shilling was expected to trade in a
range of 94.00 to 96.00 in the week ahead.
"The shilling is expected to remain range-bound during the
week with volatility not being ruled out should CBK be active in
the market," said Bank of Africa said in daily report to its
clients.
In the money market, the weighted average interbank lending
rate inched up to 5.1957 percent on Friday from 5.1257 percent
previously.
The discount window rate was unchanged for the third day at
10 percent, central bank data showed.
