NAIROBI: The Kenyan shilling firmed slightly on Wednesday thanks to commercial banks selling dollars to meet local currency-denominated tax payments, while shares fell for a fifth straight session.
At close of trade at 1300 GMT, commercial banks quoted the shilling at 86.10/30 to the dollar, compared with Tuesday's close of 86.20/30.
"It's just mainly a bit of interbank selling to meet tax payments," a senior trader at one commercial bank said.
Traders said earlier in the session the shilling was expected to remain under pressure from importer demand as the month drew to a close.
"There is a bit of corporate (dollar) demand at this level. It's demand-driven at the moment, and I feel by next week it will be back up again, maybe to the 86.40 level," said Sheikh Mehran, senior trader at KCB Bank Group.
Importers typically seek dollars at the end of each month to meet payment obligations.
"We expect the shilling to start taking a beating ...as we approach the end of the month," Duncan Kinuthia, head of trading at Commercial Bank of Africa, said.
Traders said they forecast the shilling to trade in the 86.00 to 86.50 range in coming days.
On the Nairobi Securities Exchange, the main NSE-20 Share Index closed 11.02 points, or 0.23 percent, lower at 4,786.18 points.
Traders said some foreign investors were still selling as they exited the market due to the lingering effects of a sell-off in emerging markets brought about by the Federal Reserve's cuts in US monetary stimulus.
"There has been a bit of foreign selling. There has been a bit of pressure. We have seen especially the large caps being particularly hit hard. It could be may be part of the easing that we have been hearing globally," Eric Musau, research analyst at Standard Investment Bank, said.
Telecoms firm and market heavyweight, Safaricom, which has been popular with foreign buyers, was down 1.3 percent to close at 11.40 shillings a share.
On the secondary market, government bonds valued at 648.8 million shillings were traded, down from 935 million shillings at the previous session.
At a primary sale on Wednesday, the weighted average yield on a re-opened Kenyan 15-year Treasury Bond fell to 12.375 percent from 13.769 percent at the last sale in July, the central bank said.
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