UPDATE 1-Kenya shilling firms vs dollar, Safaricom lifts shares

Tue Jan 8, 2013 10:32am EST

* Cbank sells dollars to support shilling
    * Markets eye rate meeting for direction
    * Stocks outlook positive on lower inflation, interest rates

 (Adds markets close, stocks)
    By Kevin Mwanza and Beatrice Gachenge
    NAIROBI, Jan 8 (Reuters) - The Kenyan shilling firmed
against the dollar on Tuesday, and on the stock exchange
benchmark shares rose for the sixth straight session, lifted by
Safaricom and East African Breweries.
    The shilling was supported by agricultural inflows and the
central bank's sale of greenbacks to commercial banks in the
previous two sessions after the shilling slid.
    At the 1300 GMT market close, commercial banks posted the
shilling at 86.40/60 per dollar from Monday's close of 86.50/70.
    "There were some agricultural flows in the market," said
Peter Mutuku, head of trading at Bank of Africa. "The bank sold
dollars yesterday, but I did not see them in the market today."
    Tea, Kenya's leading hard currency earner, is usually
auctioned every Tuesday at the port city of Mombasa.
    Mutuku said the shilling had weakened due to dollar demand
after the holidays and he did not rule out any further dollar
injection in coming sessions. 
    Chris Muiga, a senior trader at Kenya Commercial Bank, said
that the weakening of the shilling had forced the central bank's
hand to sell an unspecified amount of dollars in the market.
    The bank has fostered stability by using tools such as
repurchase agreements to soak up excess liquidity from the
market, and by building up its hard currency reserves.
    The country's official usable foreign exchange reserves
 edged down to $5.369 billion last week from $5.396
billion a week earlier, the central bank said. 
    The market is also awaiting the central bank's rate decision
when policymakers meet on Jan. 10, for further insights on the
likely direction of the shilling, traders said. 
    The central bank is expected to cut its benchmark lending
rate by one percentage point to 10 percent to
stimulate the economy, a Reuters poll showed on Tuesday.
 
    "Right now they can either support the economy by reducing
rates or support the currency by keeping liquidity tight," said
Muiga.
    In stocks, the benchmark NSE-20 share index rose
0.8 percent to 4,247.74 points, hovering at a 22-month high.
    Faith Atiti, an analyst at NIC Securities, said the bourse
outlook remained positive on the back of lower inflation and an
anticipated interest rates cut to boost economic growth.
    Shares in leading telecoms provider Safaricom, closed 4.7
percent higher at 5.60 shillings, after rallying 9.4 percent to
a new 28-month high of 5.85 shillings.
    "The telecommunication firm is expected to report strong
results backed by increased voice revenues following a 33
percent tariff increase in the year," Atiti said.
    East African Breweries, the country's leading brewer, closed
2.9 percent up at 280 shillings a share after jumping 8.5
percent to an all-time high of 295 shillings earlier in the
session, largely driven by foreign investors buying the shares
before its half-year results. 

               ...........................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:
                                    
            
 
 (Editing by George Obulutsa and Stephen Nisbet)
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