NAIROBI: Kenya's shilling reversed some of its gains from earlier on Thursday due to some dollar demand from various sectors, but stayed at a one-month high.
Stocks were down for a fifth straight day.
At the close of trade at 1330 GMT, commercial banks quoted the shilling at 104.40/50 to the dollar, compared with Wednesday's close of 104.55/75.
"There's slight demand in the market, not from any particular sector, just importers, and some corporate (clients)," said a senior trader at one commercial bank.
Earlier in the session it strengthened to touch 104.20/40, and is still trading at its strongest level in a month.
Traders attributed its earlier gains to acute shilling liquidity in the money markets and rising yields on government securities, which had attracted offshore investors.
Yields on Kenya's 182-day Treasury bills jumped to 20.695 percent at Wednesday's auction from 16.301 a week earlier, while yields on 182-day bills shot up to 20.331 percent from 14.551 percent.
A shortage of shilling liquidity has also driven up overnight lending rates, reaching about 27 percent this week from 13 percent earlier this month.
On the Nairobi Securities Exchange, the main NSE-20 Share Index was down 20.52 points, or 0.5 percent, to close at 4,153.00 points.
Among the companies whose share prices fell was Kenya Commercial Bank, which was down 3.2 percent to close at 45.50 shillings.
Virginia Wairimu, research analyst at Suntra Investment Bank, said the drop was attributed to investors exiting stocks and looking for alternative investments, given the rising interest rates on government securities.
"Those are the indicators of where we are going. You can't ignore that. Definitely you have to look for something else that is making money. If you can get 20 percent on the (Treasury) bill, why should I stay in the (stock) market where there is stagnation?" Wairimu said.
On the secondary market, government bonds valued at 1.74 billion shillings were traded, up from 1.49 billion shillings on Wednesday.
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