Kenyan shilling falls to new 3-year low, central bank action eyed

A currency dealer counts Kenya shillings at a money exchange counter in Nairobi October 23, 2008. REUTERS/Antony Njuguna·Reuters· (Reuters)

NAIROBI (Reuters) - The Kenyan shilling weakened to a new three-year low on Friday, hurt by worries over the country's ailing tourism sector and traders said they expect the central bank to intervene and prop up the shilling. At 0745 GMT, commercial banks posted the shilling at 89.80/90.00 to the dollar, weaker on Thursday's close of 89.70/80, its weakest level since December 2011. Traders said they expect the central bank to defend the shilling, following comments made by the bank on Tuesday that it had adequate hard currency reserves to cushion the foreign exchange market against any shocks. "The shilling is on the back foot... we’d expect (the central bank) to do something at these levels," said Nahashon Mungai, a trader at KCB. Mungai said the sell-off in Nigerian stocks and currency, could spill over into the Kenyan market. "Then of course the feeling is that what we are seeing in Nigeria, (offshore investors) are leaving Nigerian markets and there is a fear there could be a contagion effect on Kenya," Mugnai said. The naira has come under pressure in the past two months from falling global oil prices LCOc1, dampening the appetite for assets in Africa's biggest economy and chief oil exporter. [ID:nL6N0SV02N] The shilling has weakened about 4.2 percent against the dollar this year. The local currency has been on the back foot most of this week, losing about 0.5 percent against the dollar after weekend attacks along its Indian Ocean coastline reignited fears that the tourism industry will continue to suffer. Previous attacks by militants in the region that is a major tourist hub have scared away visitors and prompted Western nations to issue travel advisories. This has led to a drop in tourist arrivals this year, hurting Kenya's tourism sector, a key earner of hard currency. ...........................Shilling spot rates <0#KESF=>.....................Shilling forward rates .......................Cross rates ..................................Local contributors .......................Central Bank of Kenya Index .....................Kenyan Bonds contributor pages ...............Treasury bill yields ..................Central bank open market operations .........................Horizontal repo transactions ,................Daily interbank lending rate <0#KETSYSTR=>.............................Kenya Bond pricing ..................Real time Africa economic data ...........................African economic news .................................NSE-20 Share Index .................................NSE All Share Index ...........................FT NSE Kenya 15 Index .......................... FT NSE Kenya 25 Index SPEED GUIDES: (1 US dollar = 89.3000 Kenyan shilling) (Reporting by Drazen Jorgic; Editing by James Macharia)

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