NAIROBI (Reuters) - The Kenyan shilling rose 1.7 percent to trade at 99.70 against the dollar on Thursday, driven by market caution over how the central bank will conduct hard currency trades directly with key economic sectors, traders said. The local currency started rallying on Wednesday after the Central Bank of Kenya changed its policy to sidestep banks in some instances and trade directly with end customers, a move that is expected to stem the shilling's weakening. At 0717 GMT commercial banks quoted the shilling at 99.80/100.00, firmer than Wednesday's close of 101.20/40. "There is a bit of selling of dollars because no one wants to hold any positions before they know how CBK will implement the direct trades," said Ignatius Chicha, head of markets at Citibank. He said greenback demand had eased as customers expected to be able to buy dollars more cheaply from the central bank, and those banks holding dollars were selling them in anticipation of a stronger shilling. The central bank is expected to give a directive soon on how it will implement direct foreign exchange trades with specific sectors, traders said.
