UPDATE 1-Kenyan shilling flat vs dollar as liquidity tightens

* Tax, debt payments tightens shilling liquidity
* Importers end-month orders seen pressuring shilling
* Kenya Airways shares extend loses

(Adds markets close, stocks)
By Kevin Mwanza
NAIROBI, Sept 21 (Reuters) - The Kenyan shilling was
steady against the dollar on Friday, underpinned by tight
liquidity in the market as investors paid for government debt
auctioned this week and companies made tax payments.
At debt auctions this week the central bank sold a combined
23.2 billion shillings ($273.6 million) worth of a new 15-year
bond, and six-month and three-month Treasury bills.
Traders said payment of value-added taxes (VAT), which fall
due on the 20th of every month, had tightened liquidity in the
market as companies withdrew money from banks.
"(Liquidity) could be a bit tight on the money markets
because of tax and bond payments falling due," said Christopher
Muiga, a senior trader at Kenya Commercial Bank.
At the 1300 GMT market close, commercial banks quoted the
shilling at 84.80/90 per dollar, barely changed from Thursday's
close of 84.75/95.
The shilling is 0.4 percent up against the dollar so far
this year.
On the money market, the weighted average interbank rate
inched up for the third straight session to 6.8 percent on
Thursday, from 6.7 percent on Wednesday.
The central bank was also in the repurchase agreement market
to mop up 5.5 billion shillings, but only took out 1.75 billion
shillings in 7- and 14-day repos.
Traders said the shilling could face depreciation pressure
next week from importers buying dollars to meet their end-month
purchases.
"The shilling may struggle to cross 85.00, but in the long
run we could see it above that," Muiga said.
Technical analysis charts showed the shilling's support
level at 85.00, and traders said if it were to cross that, it
could weaken to touch the 85.50 level.
On the stockmarket, the main NSE-20 share index
dipped 0.2 percent to 3,927.44 points.
Shares in Kenya Airways, one of Africa's leading
airlines, extended losses, sliding 5.7 percent to an eight-year
low of 12.20 shillings.
"Apart from staff cuts, Kenya Airways is still a long way to
containing its high operational cost. Competition on local
routes by FastJet is also making investors a bit jittery," said
Rufus Mwanyasia, an analyst at Tsavo Securities.
Shares in tea and coffee producer Sasini fell 2.1
percent to 11.40 shillings. The company said in August that it
expected its full-year earnings to be hurt by weak coffee prices
and high input costs.
In the debt market, 2.9 billion shillings' worth of
government and corporate bonds were traded, down from 4.7
billion shillings on Thursday.
...........................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 = 84.8000 Kenyan shillings)

(Editing by Richard Lough and Susan Fenton)