Kenyan shilling steady, seen firmer on low dollar demand

NAIROBI (Reuters) - The Kenyan shilling was steady early on Friday, with traders betting it would firm slightly on banks selling dollars given sluggish demand from importers for the U.S. currency early in the month. By 0708 GMT, commercial banks quoted the shilling at 87.30/50, a fraction stronger than Thursday's close of 87.35/55. "Flows have been very thin," said a trader at one commercial bank. "But I will be very cautious of the shilling making significant gains on the dollar." The shilling has moved little since the central bank left its key interest rate unchanged at 8.50 percent on Tuesday, with inflation expected to keep rising after lawmakers widened the bracket of goods subject to value-added tax. The bank on Thursday resumed mopping up shillings using repurchase agreements after liquidity increased due to maturing local debt redemptions. It absorbed 3.8 billion shillings on Thursday, the first time it has done so since July 26. "The shilling has a little more room to strengthen as dollar demand during the beginning of the month is always limited," said Bank of Africa in a daily note.