Kenya shilling firms after ICC ruling, stocks fall

NAIROBI : The Kenyan shilling reversed early losses on Monday when banks sold dollars after the International Criminal C
23 Jan, 2012

The Hague-based court said it would try Kenya's presidential contenders William Ruto and Finance Minister Uhuru Kenyatta and two other men.

At the 1300 GMT markets close, commercial banks posted the shilling at 86.00/30 against the dollar, barely changed from Friday's close of 86.00/20.

The shilling was down 0.7 percent intraday, touching 86.60/80 per dollar, pushed down by banks buying dollars on an anticipated rush rush for dollars after the ruling.

"We saw a massive gain mainly on interbank dollar sells. Some guys had gone long hoping that there would be increased (dollar) demand after the ruling...but there was no follow through and they were forced to cut back," said Dickson Magecha, a trader at Standard Chartered Bank.

"The ruling had already been factored in. The markets have now put the ICC behind it and we'll now trade on fundamentals," said Magecha.

Kenyatta, the country's richest man and finance minister, has ramped up his presidential election campaign this month, and is running a close second to Prime Minister Raila Odinga in the polls. The prosecution of Kenyatta, who has yet to comment on Monday's ruling, may raise worries of a new round of political volatility.

The central bank, which has been absorbing liquidity and selling dollars in a bid not to let the shilling repeat last year's collapse, was in the market to mop up 1 billion shillings ($11.6 million) but did not get any bids from commercial banks.

Traders said they expected the shilling to come under presure from importers buying dollars to meet their end-month obligations.

"As we head into the week preceding the end of month, the local unit could be undermined by dollar buy orders to meet end of month requirements," said Bank of Africa in a daily report.

In stocks, the key NSE-20 Share Index fell for the second day, down 0.4 percent to 3,171.63 points dragged down by shares in Safaricom, which closed down 1.5 percent at 3.25 shillings.

Ronald Lugalia, an analyst at Afrika Investment Bank, said investors were booking gains on the telecom service provider Safaricom, after it rose to a 22-week high of 3.30 per share on Friday.

"The building of supply on the counter (Safaricom) was attributed to quick profit taking by some investors," said Lugalia.

 

Copyright Reuters, 2012

 

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