UPDATE 1-Kenya shilling weakens vs dollar, shares inch up

Fri Nov 23, 2012 10:23am EST

* Shilling seen weaker on lower interest rates
    * Safaricom rises above psychological 5 shilling a share

 (Adds markets close, stocks)
    By Kevin Mwanza and Beatrice Gachenge
    NAIROBI, Nov 23 (Reuters) - The Kenyan shilling ended
weaker on Friday when banks bought dollars on expectations the
shilling may fall further, while heavyweights Equity Bank
 and Safaricom led shares higher.
    At the 1300 GMT market close, commercial banks posted the
shilling at 85.85/95 per dollar, 0.2 percent weaker than
Thursday's close of 85.65/85.
    "The shilling weakened on short covering ahead of the
weekend and generally weaker emerging markets sentiment," said
Christopher Muiga, a senior trader at Kenya Commercial Bank.
    Robert Gatobu, a trader at Bank of Africa, said the shilling
was expected to weaken next week. It is also set to face 
pressure from commercial banks lowering their lending rates,
which is set to spur demand for dollars to buy imported goods.
    Policymakers have cut official lending rates by 700 basis
points in three meetings since July, to 11 percent, prompting
commercial banks to ease the cost of credit.
    The Central bank has, however, been actively absorbing
liquidity this year via repurchase agreements (repos) to support
the shilling, which is down 0.8 percent in the year-to-date.
 
    It soaked up 4.4 billion shillings ($51.3 million) on Friday
after receiving 5.7 billion shillings for the 5 billion shilling
in repos it had offered. 
    In stocks, the benchmark NSE-20 Share Index inched
up 0.1 percent to 4,166.55 points.
    Safaricom, one of the most traded stocks and the second-most
capitalised on the bourse, extended its gains by 1 percent to
5.00 shillings, its initial offer price and a two-year high last
touched on Oct. 26, 2010.
    The telecoms firm, which traded 78 percent of the total
volume on Friday, has rallied 68 percent this year on the back
of improved earnings to beat the market average rise of 30
percent year-to-date. 
    "Safaricom continued to witness strong demand and is
expected to continue supporting performance at the bourse," said
Ronald Lugalia, an analyst at Afrika Investment Bank.
    Equity Bank shares recouped most of the previous session's
losses, up 2.1 percent to 24 shillings each.
    In debt, government and corporate bonds worth 2.1 billion
shillings were traded, up from 711 million 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 = 85.7500 Kenyan shillings)

 (Editing by James Macharia; editing by Ron Askew)