Tight supply keeps Kenyan shilling rooted around 85 per dollar

NAIROBI (Reuters) - The Kenyan shilling held steady on Thursday, underpinned by a short supply of the currency that traders said was stifling demand for dollars in the market.

At 0751 GMT, commercial banks quoted the shilling at 84.95/85.05 per dollar, matching Wednesday's closing price.

"The money market is very short on shillings," said Wilson Mutai, a trader at Gulf African Bank. "Unless this liquidity improves the market is not going anywhere."

Heavy demand from both offshore and local investors for Kenyan government debt as well as equities was draining shillings, traders said.

Earlier this week, Kenya raised the full 16 billion shillings sought in a 12-year infrastructure bond tap sale.

The tight liquidity has left the overnight borrowing rate rising steadily for more than a month, with the central bank quoting a weighted average overnight rate of 10.7062 percent on Wednesday compared with 6.9383 on September 17.

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