UPDATE 1-Kenya shilling holds steady vs dlr, stocks rise

Wed Apr 18, 2012 10:39am EDT

* Shilling seen supported by tightening liquidity
    * Cbank stays out of repo market
    * Stocks lifted by large caps

 (Adds markets close, stocks)	
    By Beatrice Gachenge and Kevin Mwanza	
    NAIROBI, April 18 (Reuters) - The Kenyan shilling 
held steady against the dollar on Wednesday, with traders saying
tightened liquidity would drive up interbank rates and support
the local currency, while stocks rose lifted by interest in
highly capitalised firms.	
    At the 1300 GMT market close, commercial banks posted the
shilling at 83.15/25 per dollar, barely changed from Tuesday's
close of 83.10/30. 	
    Robert Gatobu, a trader at Bank of Africa, said the market
was feeling the impact of the central bank absorbing excess
shillings in the market.	
    "With high interest rates, it will support the shilling
because it's expensive to hold long dollar positions," Gatobu
said.    	
    The tightening liquidity situation due to tax payments this
week left little for the central bank to mop up through
repurchase agreements. 	
    The bank stayed out of the market on Wednesday after soaking
up a total 31.65 billion shillings ($380.6 million) over the
last two weeks to help stabilise the average interbank rate,
which fell to 10.2 percent on April 5. 	
    The interbank rate has since risen, climbing to 16.4 percent
on Tuesday from a day earlier.	
    Traders said they expected the rate to reach the central
bank's benchmark rate of 18 percent soon on tightening liquidity
as companies settle their monthly value added tax payments.
 .	
    "The shilling is rangebound. The central bank may stay out
of the market due to the tightening liquidity," said Duncan
Kinuthia, head of trading at Commercial Bank of Africa.	
    Kinuthia said the disbursement of $110.9 million by the
International Monetary Fund under a three-year programme could
somewhat shore up the local currency. 	
    In stocks, the benchmark NSE-20 Share index rose 0.8 percent
to 3,489.24 points and traders said institutional investors were
in the market buying on most large caps.	
    "Interest in large caps by institutional investors lifted
the most stocks today. They seem to be moving out of debt as
yields fall and favouring equities," said Rufus Mwanyasia, an
analyst at Tsavo Securities.	
    Shares in retail supermarket chain, Uchumi, added
2.9 percent to 14.45 shillings as investors bet on the firm
performing better. The company could declare a dividend this
year after a six year drought.	
    Barclays Bank was also up 2.9 percent to 12.85
shillings a share.	
    On the fixed income market, government bonds worth 2.2
billion shillings were traded, up from 1.7 billion shillings on
Friday. The one-year bond was the most active at an average
yield of 16 percent.	
               ...........................Shilling spot rates
                  .....................Shilling forward rates
                           .......................Cross rates
         ..................................Local contributors
           .......................Central Bank of Kenya Index
          .....................Kenyan Bonds contributor pages
                          ...............Treasury bill yields
        ..................Central bank open market operations
        .........................Horizontal repo transactions
         ,       ................Daily interbank lending rate
              .............................Kenya Bond pricing
             ..................Real time Africa economic data
 <ECI & AFR> ...........................African economic news
          .................................NSE-20 Share Index
         .................................NSE All Share Index
             ...........................FT NSE Kenya 15 Index
             .......................... FT NSE Kenya 25 Index
  SPEED GUIDES:
                                    
            
  ($1 = 83.1500 Kenyan shillings)	
	
 (Editing by Yara Bayoumy, Ron Askew)