Kenyan shilling weakens vs dollar, shares extend gains

NAIROBI: The Kenyan shilling weakened on Monday as importers bought dollars with an eye on a court ruling due this week on a challenge to the presidential election, while shares rose for a second session.

At the 1300 GMT market close, commercial banks quoted the shilling at 85.90/86.10 to the dollar, 0.2 percent weaker than Friday's close of 85.70/90.

"We're looking at some month-end dollar demand with a focus on the end-of-the-week court ruling," said Dickson Magecha, a trader at Standard Chartered Bank, referring to a petition lodged by defeated presidential contender Raila Odinga.

The shilling has been trading in a tight band of 85.00 to 86.00 against the dollar since Odinga challenged the result of the March 4 election at the Supreme Court. Uhuru Kenyatta, who faces of charges of crimes against humanity at the International Criminal Court, was declared winner in the poll.

If the court rules in favour of Odinga and orders a fresh election, the political uncertainty that would result would likely weigh on the shilling, traders said.

Under the country's constitution, the court must deliver a ruling on the petition by the end of this week.

Traders said they expected the central bank to mop up shilling liquidity from the money markets due to debt redemptions this month.

The weighted average interbank rate fell for the 12th straight session to 8.42 percent on Friday from 8.48 percent on Thursday.

At the Nairobi Securities Exchange, the main NSE-20 share index rose 0.4 percent to 4,732.79 points on Monday as the market recovered from a two-week fall.

The index initially surged 7 percent in two sessions after Kenyatta was announced the winner of the election on March 9, but lost all the gains as it became clear to the market that Odinga was keen to challenge the results.

"The market is receiving strong support from investors seeking bargains as most share prices seem to have stabilised and trading within their fair values," said Ronald Lugalia, an analyst at Afrika Investment Bank.

Nation Media Group, the region's leading media house, extended gains by 2.8 percent to 330 shillings per share after the company posted a 25 percent rise in full-year profit and offered a one-for-five bonus share last week.