UPDATE 1-Kenyan shilling strengthens, shares fall

Tue Dec 17, 2013 9:58am EST

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* Tight liquidity helps to boost the shilling
    * South Sudan crisis could hit Kenyan banks

 (Adds shares, closing rate)
    By Duncan Miriri
    NAIROBI, Dec 17 (Reuters) - The Kenyan shilling 
firmed on Tuesday as importer appetite for dollars slowed down
ahead of the holidays, while shares fell by almost a percentage
point, and traders were monitoring the instability in
neighbouring South Sudan.
    At the 1300 GMT close of trade, leading commercial banks
posted the shilling at 86.00/10 against the dollar, up from
Monday's closing rate of 86.35/45.
    "There was a bit of tight liquidity so that also contributed
to the stronger shilling," said Nahashon Mungai, a trader at KCB
Bank.
    In the money markets, the overnight borrowing rate for banks
crept up to 7.8245 percent on Monday, from 7.4660 percent last
week. 
    Higher short-term interest rates make it slightly more
expensive for banks to fund long dollar positions. Mungai said
some foreign market players sold dollars during the session,
offering further support.
    The shilling was likely to find resistance at the level it
closed at, with a break past 86.00 ushering in 85.60 as the next
target, traders said.
    In the stock market, the benchmark NSE-20 share index
 slid 0.74 percent to close at 4,876.05 points as
investors sold off shares in blue chip firms.
    Eva Njuguna, the chief dealer at Sterling Investment Bank,
said investors were worried about the possibility of the U.S.
Federal Reserve starting to taper its stimulus and a crisis in
South Sudan where clashes broke out for a second day after the
government said it had put down a coup attempt. 
    Several Kenyan firms including KCB Bank and Equity
Bank have big operations in South Sudan which could be
affected by the violence there.
    "The banks are the drivers of the market," she said.
    In the debt market, bonds worth 1 billion shillings were
traded, the Nairobi Securities Exchange said.
               ...........................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
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 (Editing by George Obulutsa and Pravin Char)
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