Kenyan shilling weakens to near 3-year lows on dollar buying

NAIROBI (Reuters) - Kenya's shilling fell to near three-year lows on Tuesday, weakened by dollar demand from companies, but its retreat was limited by speculation the central bank might intervene to prop up the currency. Traders said the shilling still had a weakening bias after retreating on Monday after Islamist militants ambushed a bus and killed 28 people near the Somali border at the weekend. At 0700 GMT, commercial banks posted the shilling at 90.20/90.30 against the dollar, weaker than Monday's closing level of 90.05/25. Earlier this month the shilling weakened to 90.25/35, its lowest level since November 2011. "There is dollar buying from businesses that want to pay for their orders before closing by mid-December, in addition to the jitters that affected the shilling after the attack over the weekend," Martin Runo, a senior trader at Chase Bank, said. "We are seeing importers, manufacturers, the oil and telecommunication sectors buying dollars, but people are trading cautiously. No one wants to go past the 90.40-level because we have seen central bank selling around those levels," he added. The central bank sold dollars on Thursday and Friday last week to prop up the shilling, on both occasions offering dollars when the local currency was around the 90.30-level. The shilling has weakened by 4.64 percent against the dollar so far this year, under pressure due to a slump in revenues from tourism, a major hard currency earner that has been affected by a spate of militant attacks in East Africa's biggest economy.