Kenya shilling seen weakening

NAIROBI–The Kenya shilling was flat yesterday, but seen weaker towards the end of the month amid signs a liquidity crunch is easing and on anticipated dollar demand from corporate clients ahead of March’s presidential election, traders said. Importers have been stockpiling shillings since the beginning of the year ahead of next month’s tight presidential race in East Africa’s biggest economy.It is the first presidential vote since 2007, when President Mwai Kibaki’s disputed re-election sparked weeks of nationwide violence that left more than 1,000 dead.“Looks like there is interest on the demand side building up towards end-month, so we might see it weaken slightly,” said Jeremiah Kendagor, head of trading at Kenya Commercial Bank. Commercial banks posted the shilling at 87.40/55 per dollar, barely changed from Friday’s 87.40/50. So far this year the shilling is down 1.4 per cent against the dollar, with a sharper decline only prevented by the central bank intervening steadily to drain shillings from the money market. This has tightened liquidity and driven up the interbank lending rate steadily since mid-January. The bank stepped in yesterday to mop up Ksh15b.