The Kenyan shilling fell against the dollar on Wednesday as oil importers bought the US currency, while stocks edged down for the third straight session due to profit-taking.
At the 15:00 SA time market close, commercial banks quoted the shilling at 83.40/50 per dollar, weaker than Tuesday's close of
83.20/40.
“We've seen dollar demand from energy and oil guys” said Robert Gatobu, a trader at Bank of Africa.
“There's still some demand because customers have been holding orders back for a while.”
Traders said they expected the shilling to weaken to 83.75 per dollar by the end of the week due to good liquidity.
The central bank stayed out of the money market for a second straight day after mopping up 25 billion shillings ($299.9 million) through repos since April 27.
The shilling has gained 2.2 percent so far this year, extending a recovery from a record low of 107 per dollar hit in October, helped by very tight monetary policy. The central bank held its policy rate at 18 percent for a fifth month in a row last week.
Foreign investor interest in government debt has also helped the shilling gain this year.
The central bank sold 3.9 billion shillings of six-month and one-year Treasury bills on Wednesday, amid heavy demand for the 4 billion shillings on offer, which sent yields tumbling.
In shares, the benchmark NSE-20 Share Index lost 0.4 percent to close at 3,585.93 points as investors continued to take profits following a recent rally.
“The same players we saw bring the market up are dragging it down as investors take profits,” said Rufus Mwanyasia, an analyst at Tsavo Securities.
“However, we're expecting good first quarter results trickling in to support.”
Mumias Sugar, a grower and miller of the sweetener, shed 0.8 percent to finish at 5.60 shillings a share. The stock rallied in April after it got a new chief executive and on expectations of good cane production this year.
In the debt market, government bonds worth 3.1 billion shillings were traded, up from 1.7 billion shillings on Tuesday.
The two-year bond dominated trade at a yield of 13.8 percent.
Traders said the central bank will auction a five-year bond worth 3 billion shillings this month after yields on short-term paper tumbled, allowing it to start issuing longer-dated bonds.
“The central bank is trying to give long term bonds since the rates are stable,” said Mwanyasia. - Reuters