UPDATE 1-Kenya shilling edges up, shares barely changed

Fri Jul 25, 2014 10:52am EDT

* Tight liquidity boosts the shilling
    * Safaricom shares rise 1.67 pct

 (Adds closing rate, shares)
    By Duncan Miriri
    NAIROBI, July 25 (Reuters) - The Kenyan shilling 
strengthened marginally against the dollar on Friday while the
benchmark shares index was little changed.
    At the 1300 GMT close of trade, commercial banks posted the
shilling at 87.65/75, compared to 87.80/90 the previous day.
    One currency trader attributed the move to a liquidity
squeeze in the money markets due to a delay in the release of
government funds to local authorities.
    The weighted average interest rate on the overnight
borrowing market for banks rose to 7.8038 percent on Thursday
from 7.6651 percent the previous day. 
    Tighter liquidity in the money markets usually makes it
slightly more expensive for banks to fund long dollar positions,
thus cushioning the shilling.
    Traders said the shilling could come under pressure next
week when the government releases funds combined with the
traditional end-month demand for dollars by importers.
    "We might see liquidity improve next week," said a trader
with a leading commercial bank.
    The shilling has been stuck in a tight band of 87.50-88.00
for weeks, with worries over militant attacks limiting its
gains. The central bank has also signalled it does not wish to
see it slip below the 88.00 level.
    On the stock market, the benchmark NSE-20 share index
, was barely changed, shedding a modest 4.67 points to
close at 4,879.09 points.
    "It has been treading water," said Aly Khan Satchu, an
independent trader and analyst, adding that investors were still
waiting for interest rates to fall after the country issued its
debut Eurobond last month before shifting out of cash.
    The east African nation borrowed $2 billion via the Eurobond
issue at lower than expected interest rates but that has yet to
trickle into the domestic market, where lending rates remain
obstinately high.
    Shares of Safaricom, Kenya's largest telecoms
operator, rose 1.67 percent to 12.20 shillings each after a
parliamentary committee approved the award of a key security
system contract by the government to the firm. 
    In the debt market, bonds worth 2.79 billion shillings were
traded, slightly up from the previous day's volume of 2.66
billion shillings. 
               ...........................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 Gareth Jones)
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