NAIROBI: The Kenyan shilling took a breather on Friday after three straight sessions of moderate gains, and traders said it could firm further on reduced demand for dollars from companies.
On the share market, the main NSE-20 index gained for the first time in three sessions, led by small-cap stocks.
The shilling has gained 0.7 percent since April 2, as investors unwound dollar hedge positions taken before the March 4 national election amid worries about ballot-related violence.
The generally peaceful election and a Supreme Court verdict confirming Uhuru Kenyatta's narrow presidential win confounded many pundits' predictions that the country would descend into tribal violence as it did followi9ng the previous vote in 2007.
At the 1300 GMT market close, commercial banks quoted the shilling at 84.70/90 to the dollar, unchanged from Thursday.
"There is reduced demand for dollars from corporates. There was quite a bit of stockpiling before the election and forward covering," said Christopher Muiga, a senior trader at Kenya Commercial Bank.
The shilling has gained 1.5 percent against the dollar this year, and some Treasury officials are concerned the currency is becoming too dear.
"Our problem is now that the Kenyan shilling is getting too strong, and could be a problem for our exports," outgoing Finance Minister Robinson Githae said at a public function on Friday.
Traders say technical analysis suggests the shilling could strengthen below its 84.50 resistance level and target 84.00 in coming sessions.
In stocks, the benchmark index edged up 0.2 percent to 4,985.68 points.
"After the two-day downward correction, (stock) prices are rebounding on renewed demand, especially from locals," said Anthony Kimani, an analyst at Genghis Capital.
Nation Media Group, the region's leading media house, rose 1.6 percent, lifted by investors angling for a 7.50 per share dividend payout and a one-for-five bonus issue.
In the debt market, bonds worth 2.15 billion shillings ($25.3 million) were traded, up from 1.75 billion shillings on Thursday.
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