November 8, 2012 / 3:08 PM / 5 years ago

UPDATE 1-Kenyan shilling steady vs dollar, shares rise

* Shilling seen pressured by importers orders
    * Shares seen rallying after cbank rate cut

 (Recast with closer, stocks)
    By Kevin Mwanza
    NAIROBI, Nov 8 (Reuters) - The Kenyan shilling was steady
against the dollar on Thursday but could come under pressure in
days ahead after the central bank cut its key interest rate on
Wednesday.
    Shares on the Nairobi bourse rose for the second session
running, extending gains seen in the wake of the central bank
action the previous day.
    At market close at 1300 GMT, the shilling was quoted
at 85.30/50 to the dollar, barely changed from Wednesday's close
of 85.25/45.
    "We expect the shilling to weaken gradually to about 85.70
on importer demand for dollars," said Julius Kiriinya, a trader
at African Banking Corporation.
    "Sentiment favours a weak shilling on the fact that its
cheaper for importers to access credit."
    Citing declining inflation and slowing economic growth, the
Central Bank of Kenya (CBK) on Wednesday slashed its key lending
rate by 200 basis points to 11 percent. It began
easing policy in July but Wednesday's cut was less than the
record 350 bps reduction in September. 
    Analysts say an increase in the import bill due to a hike in
government spending ahead of March 2013 elections, coupled with
rising oil and global food prices, could lead to an increase in
imports and present downside risks to the shilling.
    However, Christopher Muiga, a senior trader at Kenya
Commercial Bank, said the central bank's frequent liquidity
mop-ups using repurchase agreements (repos) would provide some
support for the local currency. 
    At the Nairobi Securities Exchange, the benchmark NSE-20
Share Index rose for the second straight session, up
0.7 percent to 4,148.79 points.
    The index has risen 29 percent this year, lifted by a
re-allocation of assets after yields fell in the debt market and
bets on firms performing better this year as interest rates
drop.
    "The central bank rate cut was a big boost for equities. It
may close the year much higher," said Brenda Kithinji, an
analyst at Standard Investment Bank.
    Sugarcane grower and miller, Mumias, continued its
recovery after it tumbled after going ex-dividend on Monday. It
gained 1.8 percent to 5.80 shillings a share.
    In the debt market, the weighted average yield on the
benchmark 91-day Treasury bills rose to 10.346 percent at the
auction, from 10.237 percent last week. 
    Government and corporate bonds worth 705 million shillings
were traded, down from 3.1 billion shillings on Wednesday.     
               ...........................Shilling spot rates 
                  .....................Shilling forward rates 
                           .......................Cross rates 
         ..................................Local contributors 
           .......................Central Bank of Kenya Index 
          .....................Kenyan Bonds contributor pages 
                          ...............Treasury bill yields 
        ..................Central bank open market operations 
        .........................Horizontal repo transactions 
         ,       ................Daily interbank lending rate 
              .............................Kenya Bond pricing 
             ..................Real time Africa economic data 
 <ECI & AFR> ...........................African economic news
          .................................NSE-20 Share Index
         .................................NSE All Share Index
             ...........................FT NSE Kenya 15 Index
             .......................... FT NSE Kenya 25 Index
  SPEED GUIDES:
                                    
            
 
 (Editing by Toby Chopra)

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