NAIROBI, Sept 16 (Reuters) - The Kenyan shilling was steady against the dollar on Friday and traders said they expected the local currency to gain some support after the central bank lifted its key interest rate earlier in the week.
The central bank held an extraordinary Monetary Policy Committee (MPC) meeting on Wednesday at which it decided to raise the Central Bank Rate by 75 basis points to 7.0 percent to curb rising inflation.
Traders said they expected the central bank would also take further action to support the shilling. The bank has sold dollars twice in the last two weeks after the shilling weakened.
At 0721 GMT, commercial banks quoted the shilling at 94.65/85 against the dollar, barely changed from Thursday's close of 94.60/80.
"I think we will stick in a range as the market digests the MPC results and see what kind of action they will be taking on the foreign exchange side," said Ignatius Chicha, head of markets at Citi Bank.
Traders said the shilling could trade in the 94.00-95.50 range during the session.
In the money market, the weighted average interbank lending rate fell on Thursday to 5.1257 percent from 5.1490 percent, while the discount window rate was unchanged at 10 percent, central bank data showed on Friday.
Traders said the central bank's rate hike had been smaller than expected and shilling liquidity was still readily available for most banks.
The interbank rate has been falling since Aug. 29 after the central bank started using a moving average of interbank rates over an unspecified period to compute its discount window rate, to help ease a sharp shilling liquidity squeeze in the market. (Reporting by Kevin Mwanza; Editing by James Macharia)
