The Kenyan shilling firmed slightly against the dollar on Tuesday but traders said they expected it to stay under pressure from importers buying the US currency to meet end-month needs.

At 09:38 SA time, commercial banks quoted the shilling at 84.05/25 per dollar, up from Monday's close of 84.20/40.

“The shilling has improved slightly on interbank selling (dollars), but we don't expect this to last because there is demand for dollars from importers,” said a trader at one commercial bank.

Traders said signs of easing liquidity after the government said it had released 7 billion shillings ($83.3 million) for its free education program could also weigh on the shilling.

The weighted average interbank interest rate fell for the first time in seven sessions to 19.3 percent on Monday, from 19.9 percent on Friday.

The central bank has persistently mopped up excess liquidity in the market via repurchase agreements (repos), helping the local currency gain 1.1 percent this year, as banks found it harder to fund long dollar positions.

The bank has stayed out of the repo market since June 19, saying the market was square, but any resumption of mopping up could support the shilling, traders said. - Reuters