UPDATE 1-Kenyan shilling dips as vote nears, shares halt rally

Thu Feb 14, 2013 10:29am EST

* Tight liquidity to support shilling
    * Market heavyweights drag shares down

 (Adds markets close, stocks)
    By Kevin Mwanza
    NAIROBI, Feb 14 (Reuters) - The Kenyan shilling 
weakened against the dollar for the first time in seven sessions
on Thursday as companies cut their exposure to the local
currency ahead of an election next month.
    In stocks, the main share index fell for the first
time in 12 sessions as investors disappointed by Barclays
earnings released on Wednesday sold off previously
red-hot bank and telecoms shares.
    The shilling was posted at 87.40/50 per dollar at the 1300
GMT close, down 0.1 percent from Wednesday's close of 87.20/40. 
    "Some corporates are looking to cover themselves ahead of
the elections," said Ignatius Chicha, head of markets at
Citibank. "But given liquidity is tight, the shilling will be
well supported."
    The east African nation holds a presidential election on
March 4. The last leadership ballot in 2007 was followed by
ethnic violence that severely damaged the economy.
    The shilling has gained 0.3 percent against the dollar since
Feb. 5, helped by the central bank mopping up liquidity, which
has sent short-term interest rates higher.  
    In the money markets, the weighted average interbank lending
rate climbed to 9.7 percent on Wednesday from 9.4 percent on
Tuesday. 
    The rate has risen for 21 consecutive sessions from a low of
5.43 percent on Jan. 15, due to the tight liquidity.
    The shilling is still down 1.3 percent in the year to date,
mainly due to pressure from importers buying dollars to stock up
on goods ahead of the vote. 
    "With the general elections just round the corner, the
shilling still is not out of the woods, however it's much better
placed at the moment than before," said Bank of Africa in a
daily note. 
    At the Nairobi Securities Exchange, the benchmark index
edged down 0.2 percent to 4,637.54 points led by market
heavyweights.
    The index had rallied 5.6 percent since Jan. 29, driven by
investors buying stocks, especially in banks, ahead of the
release of full-year earnings which they expect to be strong due
to falling interest rates and lower inflation last year.
    "What came out with Barclays Bank (yesterday) did not give
good signals to the market. Guys are rethinking their
strategies," said Rufus Mwanyasi, an analyst at Tsavo
Securities.
    Barclays posted a lower-than-expected 8 percent rise in its
full-year pre-tax profit on Wednesday. 
    Kenya Commercial Bank, the country's biggest bank
by assets, dropped 3.9 percent to 37 shillings a share. The
regional bank's shares had rallied 14.9 percent since Feb. 1.
    Safaricom, the country's leading telecoms operator
and the most traded stock on the bourse, shed 1.8 percent to
5.60 shillings a share, while East African Breweries 
fell 2.2 percent to 308 shillings ahead of its half-year
earnings on Friday.
    The two stocks are the most capitalised on the Nairobi
bourse.
    On the primary debt market, the weighted average yield on
the 91-day Treasury bills fell to 8.213 percent on
Thursday from 8.229 percent last week. 
    On the secondary debt market, bonds worth 414.7 million
shillings were traded, up from 256.6 million shillings on
Wednesday.
               ...........................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 Catherine Evans)
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