NAIROBI: Kenya's shilling strengthened from three-year lows on Thursday after the central bank intervened to support the currency by selling dollars. Stocks closed higher.
The shilling closed at 90.05/15 to the dollar, compared with Wednesday's close of 90.15/25. The local currency had at one point firmed to 89.70/90, before reversing its gains.
Sheikh Mehran, head of trading at I&M Bank, said dollar demand was coming from across various sectors, including banks, manufacturers, energy and telecommunications companies.
The central bank also sold dollars last week, helping the shilling strengthen to below the 90-mark against the dollar before it weakened again this week.
The shilling has been under pressure this year mainly due to a slump in revenues from tourism, a major hard currency earner that has been hit by a spate of militant attacks. Recently, the dollar has also strengthened against several major currencies.
The central bank has said it has enough reserves to cushion the foreign exchange market against shocks.
On the Nairobi Securities Exchange, the main NSE-20 Share Index added 28.20 points or 0.6 percent to close at 5,145.28 points.
Among the big gainers was power producer Kenya Electricity Generating Company (KenGen), rising 3.8 percent to close at 11.00 shillings a share.
Silha Rasugu, research analyst at Genghis Capital, said the stock rallied after the company announced plans to expand its power generation capacity in East Africa's biggest economy.
Centum Investment Company Ltd rose 1.6 percent to close at 63.00 shillings a share, after reporting a 25 percent rise in first half pretax profit.
"The outlook for the group looks bright," Old Mutual Securities said in a commentary on the results, adding that Centum's plans to investment in health care, education, power, real estate and assets management would buoy future earnings.
On the secondary market, government bonds valued at 2.9 billion shillings ($32.20 million) were traded, compared with Wednesday's 6.2 billion shillings.
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