Kenyan shilling firms as liquidity tightens

NAIROBI (Reuters) - The Kenyan shilling ticked up to nearly a four-month high on Monday, helped by commercial banks trimming long dollar positions due to a shortage of liquidity in the local money market. The shilling was posted at 84.60/80 per dollar by 0742 GMT, 0.4 percent above Friday's close of 84.90/85.10. "There is some interbank selling (of dollars) to cover the shilling's liquidity," said John Muli, a trader at African Banking Corporation. Overnight borrowing rates have been rising steadily for more than two weeks, sending the interbank weighted average interest rate to 10.4028 percent on Friday from 9.9184 percent in the previous session. Tight shilling liquidity makes it more expensive to hold onto long dollar positions. Traders said the local currency may also be benefiting from tea exporters selling dollars later this week after the commodity is auctioned on Monday and Tuesday. Tea is the leading hard currency earner for the east African nation. Muli said the shilling might break below the 84.50 four-month support level if demand for the greenback remains subdued.