Kenyan shilling steady against the dollar

Kenya’s shilling held steady on Tuesday, with traders expecting the currency to trade in a tight range ahead of two regular government debt auctions to be held later this week.

By the official close, commercial banks quoted the shilling at 101.95/102.05 to the dollar, the same level as Monday’s close.

The shilling, down about 13 percent against the dollar this year, has firmed in recent weeks due to inflows of dollars from offshore investors chasing high-yielding government debt.

Traders said the local currency was likely to stay supported as long as the yields on short-term Treasury bills remained elevated.

Yields on the benchmark 91-day paper slipped at last week’s auction to 19.471 percent but remain far above usual levels.

Yields on the 182 and 364-day Treasury bills were above 21 percent at last week’s auction. “There is still that element of the interest rates.

People are looking at the yield appeal,” said one trader at a Nairobi-based commercial bank.

A second trader said: “We are stuck in a range.”

In the debt market, bonds worth 1.2 billion shillings ($11.78 million) were traded, compared with the previous session’s 377 million shillings.