UPDATE 1-CE Kenyan shilling firm, main share index ends lower

Thu Jan 23, 2014 9:47am EST

* Main share index breaks three-day gaining streak
    * Shilling lifted by tight liquidity, Treasuries

 (Adds markets close, stocks, bonds)
    By George Obulutsa
    NAIROBI, Jan 23 (Reuters) - The Kenyan shilling 
strengthened on Thursday, helped by investors in government
securities and tight shilling liquidity, while the stock
exchange's main index closed lower.
    At the 1300 GMT close of trade, commercial banks quoted the
shilling at 85.45/55 to the dollar, up from Wednesday's close of
85.75/85.
    The shilling has gained 1.1 percent against the dollar since
the start of 2014, mainly due to good dollar inflows into the
local debt market and from farm sector exporters. 
    "The local unit strengthened against the dollar, boosted by
tight shilling liquidity and very high interest in the
government securities," said Sheikh Mehran, senior trader at
Kenya Commercial Bank.
    Tighter shilling liquidity makes it more expensive to hold
onto long dollar positions and so helps the shilling firm.
    The weighted average interbank lending rate rose to 9.1079
percent on Wednesday from 8.9500 percent a day before. 
    Technical charts are favouring a strong shilling, after it
broke the 85.70 resistance level, and traders said it was
expected to head to 85.00 per dollar in coming days.
    On Wednesday, the yield on the latest Kenyan 10-year bond
 eased to 12.180 percent at auction from 12.371
percent in August. The issue, worth 10 billion shillings,
attracted 40 billion shillings in bids. 
    Traders said the main near-term risk to the shilling could
be a surge in demand for dollars from importers in sectors like
energy, manufacturing and telecoms as the month-end nears.
    On the Nairobi Securities Exchange, the main NSE-20 Share
Index fell 0.55 percent to close at 5,063.98 points.
    Stock analysts said the drop in the index after three days
of rises was largely motivated by investors booking their gains.
    "We would say profit-taking activities have weighed down the
market," Genghis Capital research analyst Silha Rasugu said.
    In the debt market, government bonds valued at 1.89 billion
shillings were traded, down from 2.15 billion shillings traded
the day before.
               ...........................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 Duncan Miriri/Catherine Evans)
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