Kenya shilling stands firm before dollar
April 27, 2011 5:14 AM EST
The Kenyan shilling firmed against the dollar on Tuesday and traders expected it to gain further on the back of a squeeze on liquidity, while stocks rose slightly.
At the 1300 GMT close of trade, commercial banks quoted the local currency at 83.65/75, stronger than Thursday's close of 83.90/84.00.
"We saw a bit of selling later in the day as the shilling's tightness pushed players to sell dollars," said Dickson Magecha, a trader at Standard Chartered Bank.
"In the mid-term we expect to see a stronger shilling. It may reach 83.30 against the dollar."
The overnight lending rate jumped to 5.34 percent on Thursday from 4.778 after the central bank mopped up 1 billion shillings from the market through an 8 billion shillings repurchase agreement.
Steve Lagat, a trader at CFC-Stanbic Bank, said the market will be keenly watching to see what the central bank will do next.
In the stock market, the benchmark NSE-20 Share Index was barely changed, edging up 0.07 percent to close at
Turnover halved to 376.6 million shilling on the day and analysts attributed it to sluggish foreign investor participation in a week which has two holidays in Britain and South Africa, home to funds that invest in the Nairobi bourse.
Analysts said banks' shares will be in focus ahead of first quarter results.
"We may see a bit of demand coming in on the banking stocks, which should inevitably push up the rest of the index," said Alex Muiruri, an analyst at Dyer and Blair Investment Bank.
In the fixed-income market, bonds worth 1.63 billion shillings were traded, up from 767 million shillings on Thursday.
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