NAIROBI: The Kenyan shilling edged down against the dollar on Monday, after gunmen killed at least 50 people in an attack on the coastal town of Mpeketoni. Shares also fell.
At the 1300 GMT close of the market, commercial banks posted the shilling at 87.90/88.10, down slightly from Friday's close of 87.85/95.
"There was a knee-jerk reaction to what I think is the Mpeketoni attack," said Chris Muiga, a trader at National Bank.
The assault at Mpeketoni was the latest in a string of gun and bomb attacks that have hurt Kenya's vital tourist business and which have been blamed on Somalia's al Shabaab militant group. Western nations have issued travel warnings in the wake of the assaults.
Traders said the shilling was likely to remain trapped in a range of 87.50-88.20 per dollar over the next few days as the market waits to see the level of demand for Kenya's debut Eurobond from investors.
Initial reports indicated the Eurobond, which could raise up to $2 billion, had received orders of $3 billion by Monday afternoon.
"That could give the shilling some reprieve because the government will get more muscle in terms of intervention," said a second trader, referring to the central bank's hard currency reserves, which are sometimes used to reduce volatility in markets.
On the stock market, the benchmark NSE-20 share index dropped by 1 percent to close at 4,787.94 points, as nervous investors sold some of their shares after the Mpeketoni attack.
South African offices were closed on Monday for a public holiday there, which contributed to the decline because many foreign funds place orders for Kenyan shares through offices in South Africa, said one trader who did not wish to be named.
In the debt market, bonds worth 646 million shillings were traded, down from 1.26 billion shillings worth of bonds traded on Friday.
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