Kenya's shilling slips vs dollar, politics eyed

NAIROBI (Reuters) - Kenya's shilling eased against the dollar on Tuesday and traders said there was a lull in the market ahead of a visit to the country by the prosecutor of the International Criminal Court (ICC).

At 1110 GMT, commercial banks posted the shilling at 75.65/85 against the U.S. currency compared with Monday's closing rate of 75.20/30.

Traders said activity was muted as the market waited to gauge the impact of a visit by Luis Moreno-Ocampo, the prosecutor of the Hague-based ICC, to discuss the trial of those behind last year's bloody post-election violence.

"We have seen a round of interbank buying that has weakened the shilling. There is a focus on the imminent arrival of Moreno-Ocampo. The market is still trying to calculate the impact of that," said a trader with a leading commercial bank.

Moreno-Ocampo is due to arrive in Kenya on Thursday and is expected to hold talks with President Mwai Kibaki and Prime Minister Raila Odinga. He already has a list of people accused of perpetrating the violence, which includes cabinet ministers.

Political risk aside, the shilling is expected to strengthen this quarter on the back of inflows from tourism, an envisaged rise in remittances from Kenyans abroad to their families during the holiday season and reduced capital expenditure by firms.

The Central Bank of Kenya is, however, expected to cap any gains through regular purchase of greenbacks to rebuild its hard-currency reserves and to support shilling liquidity.