UPDATE 1-Kenyan shilling weakens, shares fall as Kenya Airways dips

Mon Aug 18, 2014 10:29am EDT

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(Adds shilling and stock market closer)
    NAIROBI, Aug 18 (Reuters) - The Kenyan shilling 
weakened on Monday after banks bought dollars to cover short
positions, traders said.
    At the close of trade, commercial banks quoted the shilling
at 88.20/88.30 to the dollar, from 88.05/88.15 on Friday.
    The shilling has been supported by tighter conditions on the
interbank market, where the weighted average lending rate rose
to 11.9492 percent on Friday from about 7.5 percent in mid-July.
    Sheikh Mehran, head of trading at I&M Bank, said there was
little dollar buying by companies and most of the trade was by
banks.
    "I have not sighted any corporate demand for dollars, they
stayed away at these levels, but there are banks buying. This is
short-covering most likely," Mehran said.
    Some traders said the government has delayed the release of
funds to departments and local authorities, causing a tightening
of the money market.
    Mercy Mbature, a trader at National Bank, said some of the
buying could be position-taking by banks concerned the shilling
could weaken further.
    Commercial Bank of Africa trader Joshua Anene said the
shilling looked vulnerable as the currency had been weakening
over the past two weeks even though liquidity had tightened.
    "That tells you that if money market conditions improve, and
the rates come down, then the shilling should come under
pressure," he said.
    Anene added that the central bank may once again intervene
if the shilling continues weakening.
    Traders forecast the shilling was likely reach 88.30 once
liquidity eased.
    On the stock exchange, shares broke a two-day winning streak
as the benchmark NSE-20 share index inched down 2.35
points to finish at 5,040.56 points, down from the 7-month high
it closed at on Friday.
    Shares in Kenya Airways fell 5 percent to 9.80
shillings, after the carrier said over the weekend it would
suspend flights to West African countries hit by the Ebola
outbreak. 
    In the debt market, bonds worth 4.8 billion shillings
($54.42 million) were traded, up from 2.8 billion shillings on
Friday.
        
 ...........................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:
    
 
    ($1 = 88.2000 Kenyan shilling)

 (Reporting by James Macharia and Drazen Jorgic)
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