NAIROBI: The Kenyan shilling closed unchanged on Thursday, but traders said it may weaken in coming days as the flow of dollars diminishes. Stocks ended four days of gains after Safaricom fell.
At close of trade at 1300 GMT, commercial banks quoted the shilling at 88.75/85 to the dollar, unchanged from Wednesday. The shilling had weakened to an intra-day low of 88.80/90.
"It weakened slightly on demand from the telecommunications sector, as well as the energy sector. There has been some demand from these two, and inflows have been quite dried out," Sheikh Mehran, head of trading at I&M Bank, said.
The Bank of Africa wrote in a report that it expects the shilling to consolidate at its present range, "with a bias for further weakness to test the 89.00 level probably a trigger point for central bank intervention."
Traders said dollar supply was low largely because tourism declined after several deadly attacks blamed on Islamists from neighbouring Somalia.
Hard currency inflows from the sale of tea at weekly auctions have also fallen this year as oversupply eroded prices. Kenya is the world's biggest exporter of black tea.
During the session, the central bank mopped up 3.39 billion shillings ($38.18 million) in excess liquidity from the money markets. The bank had sought to drain 7 billion shillings. By removing excess liquidity, the bank partly supports the shilling by making it more costly to hold onto long dollar positions.
On the Nairobi Securities Exchange, the main NSE-20 Share Index closed 0.55 percent or 28.80 points lower at 5,161.21 points.
Shares in Kenya's leading telecoms operator Safaricom, which is typically the most heavily traded stock, fell 1.5 percent to 12.95 shillings a share.
"There was profit-taking from it," Edwin Wanjohi, equity trader at Sterling Investment Bank.
Safaricom's share price has gained in recent days after it won a government contract to build a national surveillance system and acquired some competing telecommunications assets.
On the secondary market, government bonds valued at 802.2 million shillings were traded, compared with 1.8 billion shillings traded a day earlier.
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