Kenyan shilling holds steady ahead of tea bonus payments

The Kenyan shilling held steady against the dollar on Monday, with traders expecting the local currency to remain supported by tightening liquidity due to this week's tea bonus payments.

The Kenyan shilling held steady against the dollar on Monday, with traders expecting the local currency to remain supported by tightening liquidity due to this week's tea bonus payments.

At 0738 GMT, commercial banks quoted the shilling at 85.20/30 per dollar, barely changed from Friday's close of 85.20/40.

"Interest rates are ticking up slowly and with tea bonuses going out soon liquidity will tighten, which would support the shilling," said Dickson Magecha, a trader at Standard Chartered Bank.

Tea bonuses, which are paid in mid-October, affect liquidity because they concentrate liquidity on a few big commercial banks, lifting interest rates on the money market.

The east African nation is the world's biggest exporter of black tea and the crop is one of its largest foreign exchange earners, bringing in US$1.27 billion last year.

"We still expect some demand from the oil sector and some inflows from non-governmental organisations and the agricultural sector," added Magecha.

 

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