The Kenyan shilling firmed against the dollar on Monday, benefiting from higher lending rates and exporters offloading their dollars in anticipation of further strengthening.
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Shilling firms against the dollar on higher yields
At 0700 GMT, commercial banks posted the shilling at 103.10/30 per dollar, up from last week's 103.90/104.10.
A fuel attendant handles Kenyan shilling notes at a petrol station in the capital Nairobi March 15, 2011 REUTERS/Noor Khamis
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"It's more profitable to hold the shilling than the dollar," said a trader with a leading commercial bank, citing higher yields on Kenyan government securities.
The weighted average interest rate on the benchmark 91-day Treasury bill jumped to 20.637 percent at last week's auction from 18.607 percent at the previous sale.
Traders said there was also little demand for dollars, as importers stayed on the sidelines expecting the shilling to firm further, while exporters sold their dollars to lock in their gains in the face of the strengthening.
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