NAIROBI: The Kenyan shilling gained slightly on Wednesday, a day after the central bank sold dollars and said it was ready to curb speculation. Shares finished lower.
At the close of trade, commercial banks quoted the shilling at 96.40/50 to the dollar, from Tuesday's close of 96.55/65.
The central bank sold and an unspecified amount of dollars in the previous session and Deputy Governor Haron Sirima said the regulator would curb speculation in the currency market.
Traders said the shilling was however still expected to remain under pressure due to demand for dollars by importers, with some buying now for future use by using forward contracts in anticipation of a weaker shilling.
"The fundamentals still remain for a weaker shilling. We are going to see increased demand for the dollar as we cross the 15th of the month," Andlip Nazir, a senior trader at Gulf African Bank, said.
"We are also starting to see a lot of corporate clients looking to lock some forwards, because I think they feel there is panic in the market that the shilling should lose towards the 100 mark."
The shilling has lost 5.9 percent so far this year against the dollar, hit by a slowdown in foreign exchange revenues from tourism after a number of militant attacks that scared visitors away, and by a decline in horticulture earnings blamed on uneven rain.
In the stock market, the benchmark NSE-20 share index fell 0.65 percent to close at 4,980.48 points, hurt by the weakening of the shilling, as foreign investors cut their exposure.
"The market has been getting hammered lately. Some foreign investors are booking gains before the shilling weakens further," said Aly Khan Satchu, an independent trader and analyst.
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