NAIROBI (Reuters) - The Kenyan shilling held steady against the dollar on Monday and traders said it was likely to firm in the days ahead due to the central bank's intervention and inflows into government bonds from overseas investors. At 0715 GMT, commercial banks quoted the shilling at 82.80/83.00 per dollar, unchanged from Friday's close. The shilling has gained 2.7 against the dollar this year. Traders said the shilling was likely to benefit from increased inflows into Kenyan debt as offshore funds seek to tap the prevailing high yields on government securities. The central bank is scheduled to auction a 1-year bond on February22. "Offshore guys are coming to buy the government papers, attracted by the high yields ... so as long as this is happening, it will shore up the shilling," said Ignatius Chicha, head of markets at Citibank. Although there will be a sale of Treasury bills this week, foreign funds looking for capital gains prefer longer-dated paper of one year and above, traders said. "The shilling will be rangebound. There was some energy (sector) demand (for dollars) last week, but I don't expect it today," Kennedy Butiko, deputy head of trading at Bank of Africa. Last week, the central bank mopped up about 14.75 billion shillings from the money markets through repurchase agreements to support the local currency and tame double-digit inflation. Sameer Lagadia, head of trading at Diamond Trust Bank, said supply of dollars from the horticulture sector was well matched by some demand for dollars by manufacturers.

Source