UPDATE 1-Kenyan shilling stuck in narrow range, shares edge down

Tue Jun 10, 2014 10:26am EDT

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* Shilling seen in a band of 87.50-88.20
    * Main share index inches down by 0.15 percent

 (Adds closing rate, shares, bonds)
    By Duncan Miriri
    NAIROBI, June 10 (Reuters) - The Kenyan shilling 
weakened against the dollar on Tuesday and market participants
said they expected it to trade in a narrow band.
    At the 1300 GMT close of trade, commercial banks posted the
shilling at 87.70/80 per dollar, slightly weaker than Monday's
close of 87.55/65, but still within its recent range.
    The central bank would seek to support it at 88.20, to
prevent it from falling too steeply, thereby confining it into a
tight range, traders said.
    The central bank insists it has no particular level it
prefers for the shilling, but it has acted aggressively to stop
it from falling beyond that point in recent weeks.
    "Going forward we will probably trade in a very narrow range
because 88.20 will be a hard nut to crack due to the central
bank's intervention and there is demand (for dollars) at around
87.50," said Chris Muiga, a trader at National Bank.
    The central bank has regularly intervened to mop up shilling
liquidity via repurchase agreements and other instruments, and
in recent weeks traders said it had also sold dollars.
    On Tuesday, the bank mopped up 11 billion shillings using
repos. It received bids worth 32.1 billion shillings. 
    Traders are also waiting for the budget, due to be presented
to parliament on Thursday, for the latest guidance on the
economy's direction.
    On the stock market, the benchmark NSE-20 share index
 inched down by 0.15 percent to close at 4,828.65
points, falling for the second straight day.
    Shares of Centum Investment dropped 2.5 percent to
close at 39.25 shillings, after the company said it would not
pay a dividend for another five years. 
    "Some people might have expected a resumption of the
dividend which didn't happen, but overall it was a good
performance," said Eric Musau, an analyst at Standard Investment
Bank.
    In the debt market, bonds worth 1.7 billion shillings were
traded, up from zero the previous day when the trading platform
was down, according to traders.   
               ...........................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 Robin Pomeroy)
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