NAIROBI (Reuters) - The Kenyan shilling weakened against the dollar on Wednesday due to energy sector importers buying greenbacks though continuing pressure in coming days might be eased to an extent by the central bank raising its discount window rate. Traders said the shilling could get some support from rising interest rates and tight liquidity in the market after the central bank raised its discount window rate to 15.68 percent on the back of its revised overnight lending rules last week. At 0739 GMT, commercial banks quoted the shilling at 93.30/50 against the dollar, weaker than Tuesday's close of 93.10/30. "Whereas demand has been seen from the energy and oil sector, but support is seen coming from the high yields and the funding crunch," said Dickson Magecha, a trader at Standard Chartered Bank. "(The discount window rate rise) is making it very expensive to fund positions and I'm sure anyone holding long dollars might just try to sell it." The weighted average interbank lending rate rose to 12.68 percent on Tuesday, from 10.87 percent on Monday. Traders said they expected the shilling to trade in the 92.70-93.50 range against the dollar during the session. "The unit (shilling) remains vulnerable to further losses as demand for the greenback remains evident while inflows seem to have petered out," said Commercial Bank of Africa in a daily report to its clients.

Source