August 8, 2014 / 2:25 PM / 3 years ago

UPDATE 1-Kenyan shilling under pressure, shares slip

* Interbank demand for dollars weigh on the shilling
    * Shares in KCB Bank, EABL fall in profit-taking

 (Adds shares, closing rate)
    By Duncan Miriri
    NAIROBI, Aug 8 (Reuters) - The Kenyan shilling was a
touch weaker on Friday, weighed down by dollar demand from banks
replenishing their positions due to signs that a domestic
funding crunch was easing.  
    At the 1300 GMT close of trade, commercial banks posted the
shilling at 87.90/88.00, down from Thursday's close of 87.85/95.
    In recent days banks had sold off their dollars to fund 
shilling positions after short-term lending rates jumped.
Traders said this crunch is likely to ease next week.
    "As money markets loosen up, people are squeezing out dollar
shorts," said a trader with a leading commercial bank.
    Overnight borrowing rates on the interbank market shot up
over the last two weeks after the government delayed the release
of funds to departments and local authorities. The central bank
has been injecting funds into the market through reverse repos
since Tuesday, helping to alleviate the crunch. .
 
    The overnight rate crept up again to 11.7266 percent on
Thursday.
    But volumes dropped to just over 7 billion shillings,
suggesting the reverse repos were having an effect and with
about 15 billion shillings of government securities also due to
mature on Monday, interbank rates were expected to fall.
    Market participants said the shilling was likely to remain
under pressure although the central bank could sell dollars to
prevent it from slipping through 88.00.  
    In the stock market, the benchmark NSE-20 share index
  inched down 0.15 percent to close at 5,003.78 points,
as investors booked their gains from a five-day rally that ended
on Wednesday.
    Shares in KCB Bank lost nearly 2 percent to finish
at 54.00 shillings each. The shares rose to their 2014 high of
58.50 shillings on Tuesday.
    East African Breweries dropped by close to 4
percent to 297 shillings per share after it said its pretax
profit fell 6 percent in the year ended June. 
    Shares in brewer had jumped 7 percent in the week leading up
to the earnings announcement. 
    In the debt market, bonds worth 1.06 billion shillings were
traded, down from a volume of 3.17 billion shillings the
previous day.  
               ...........................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:
                                    
            
 
 (Editing by Toby Chopra)
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