NAIROBI, July 4 (Reuters) - The Kenya shilling <KES=> strengthened against the dollar on muted demand on Friday after a season of weakening and dealers said the local unit would firm further in coming days.
At 1100 GMT commercial banks quoted the local unit at 65.40/50 to the greenback, compared with Thursday's close of 65.70/80.
"(There's) not much activity, just mostly interbank squaring positions ahead of the weekend," said Benson Kaburu, a senior dealer with Standard Chartered Bank.
"The shilling will strengthen in the next few days, basically because there is no demand in the market, most people have fulfilled their end-month obligations," he said. Dealers said the market was awaiting news on whether Finance Minister Amos Kimunya would give in to pressure to resign, following a no confidence vote in parliament over his handling of the sale of Nairobi's luxurious Grand Regency Hotel.
"If he doesn't step aside we might see donors coming in to say 'we cannot give our money to someone who is corrupt to manage,' and that will have a negative effect, so dealers are waiting to see how this thing unfolds," said Kennedy Butiko, a senior dealer with Bank of Africa.
Kimunya, along with Central Bank of Kenya Governor Njuguna Ndung'u, are under pressure to step down so investigations into the Grand Regency's sale to a group of investors including Libyans can proceed. But he maintains he is clean.
The shilling is trading near levels last seen in March when it closed trade at the 66.00 level on March 11, according to Reuters data.
Dealers at the Bank of Africa said in a report that sentiment remained mixed for now but that the shilling could retrace due to lack of demand for the greenback.
"Generally speaking we should see the shilling weaken again as the country's import bill rises. On a positive note, the local unit should continue receiving support from flows from the tea sector and inflows from the diaspora," the report said.
<KES=> <KES1=>............Shilling spot rates
<KES=> <KES1=>............Shilling spot rates
<KESF=>...............Shilling forward rates
<EURKES=> <KESX=>.Cross rates
<KE/CONT1=>............All Kenya Contributors
<CBKINDEX>........Central Bank of Kenya Index
<KE/DEBT>......Kenyan Bonds contributor pages
<CBK03> <CBK06> <KE3MTB=>.Treasury bill yields
<KEIBR=>,<CBK02>..Daily interbank lending rate
<0#KETSY=>...Kenya Bond pricing
SPEED GUIDES:
<REUTERS> <KES/1> <KE/DEBT> <MONEY>
(Reporting by Wangui Kanina)
