NAIROBI: The Kenyan shilling held steady against the dollar on Monday, and was seen firming in coming days with the central bank expected to continue mopping up liquidity and importers' dollar demand seen waning, traders said.
On Kenya's benchmark NSE-20 share index, oil marketer KenolKobil slumped 8 percent in early trading after announcing a first-half loss late on Friday with markets already closed.
The company had issued a profit warning but the scale of losses exceeded expectations, equity analysts said.
At 0729 GMT, commercial banks quoted the shilling at 84.30/40 per dollar, barely changed from Friday's close of 84.20/40.
"We should see the shilling being favoured for now since demand for dollars is quite low. Most corporates have already booked forwards or met their needs," said Dickson Magecha, a trader at Standard Chartered Bank.
The Central Bank of Kenya has stepped up open market operations to soak up persistently high levels of liquidity in the market this year, using repurchase agreements (repos) to support the shilling.
Traders said the longer term outlook was for the shilling to weaken, however, with the central bank widely expected to loosen monetary policy further after a sharp fall in inflation from last year's peak of 20 percent.
The regulator last week slashed 350 basis points from its key lending rate, bringing the benchmark central bank rate down to 13.50 percent.
Inflation fell to 6.09 percent in August. Some economic analysts forecast the Central Bank of Kenya could cut the lending rate by a total 4 percentage points before the easing cycle is complete.
"The long term cost of credit would see the shilling weaken a bit as clients increase demand for dollars," Magecha said.
At the Nairobi Securities Exchange, shares in the largest oil marketer, KenolKobil, tumbled 8 percent to 13.90 shillings after the firm posted a 5.68 billion shilling ($67.3 million) pre-tax loss for the first half.
"Foreign exchange losses and high cost of products during the period just killed them (KenolKobil). That's why the shares have received such a beating," said Mwenda Rarama, an analyst at Kingdom Securities.
"They have even stopped capital investments which means forecast on returns have gone down."
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