NAIROBI: Kenya's shilling was holding firm against the dollar in early trade on Monday after the central bank intervened at the end of last week by selling dollars, lifting the currency from three-year lows, while stocks closed lower.
At the close of trade at 1300 GMT, commercial banks quoted the shilling at 89.80/90 to the dollar, compared with Friday's close of 89.90/90.00. "Nothing much has moved, because of the threat of central bank intervention based on what they did last week. So market guys have been very quiet, with a possibility that they could come in further," a senior trader at one commercial bank said.
"I would say the shilling is now poised to gain strength on the back of December (dollar) inflows and central bank action and traders also trying to square off their long positions."
In addition to central bank dollar sales, traders said investors were encouraged by Kenya's agreement last week with the International Monetary Fund on a $700 million to $750 million precautionary loan that can be drawn if needed.
A second trader said the shilling could slip to 90.50, citing 90.40 as the point where the central bank intervened on Friday. He said demand for dollars was subdued in early business but demand by importers for dollars during last week could spill into this week.
On the Nairobi Securities Exchange, the main NSE-20 Share Index was down 27.90 points, or 0.54 percent, to close at 5,111.47 points.
Traders said most of the constituent companies on the index closed lower.
Among those whose share prices fell were Centum Investments and Kenya Airways .
Centum closed 3.1 percent lower at 61.50 shillings a share. Analysts said a court was due to rule later in the week on a contract it won to build a 1,000 MW coal-fired power plant on Kenya's coast that rival bidders disputed.
"Centum, I know the ruling on the Lamu coal plant is supposed to be this week on Friday. So maybe that is affecting the share price, because the ruling could go either way," Agnes Achieng, research analyst at Sterling Investment Bank, said.
Kenya Airways, which posted a first-half loss and said annual profits would fall by a quarter, was down 1.3 percent to end the session at 7.85 shillings.
"For KQ (Kenya Airways) they also issued a profit warning for the full-year results, so that could also be a contributing factor," Achieng said.
On the secondary market, government bonds valued at 3.15 billion shillings were traded, up from 5 million shillings on Friday.
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