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UPDATE 1-Kenya shilling slides, finmin says temporary
May 30, 2012 / 4:57 PM / 6 years ago

UPDATE 1-Kenya shilling slides, finmin says temporary

* Shilling falls 0.9 pct on Wednesday
    * Currency's slide muddies prospects of a key rate cut
    * Banks feel the brunt of a bourse correction

 (Recasts with markets close, adds stocks)	
    By Beatrice Gachenge and Kevin Mwanza	
    NAIROBI, May 30 (Reuters) - The Kenyan shilling lost
almost 1 percent on Wednesday, extending a slide the finance
minister told Reuters was "temporary"  and due to banks paying
dividends to overseas investors. 	
    The shilling hit a traded low of 86.85 to the dollar on
Wednesday, its weakest level since Jan. 17. Leading commercial
banks quoted the local currency at 86.70/90 per dollar at the
market close, from Tuesday's close of 85.90/86.10. 	
    "There is no change in fundamentals," Finance Minister
Robinson Githae told Reuters on the sidelines of an African
Development Bank summit in Tanzania.	
    "We are confident that this is a temporary case. By the end
of this month, this pressure will go down,"  he said.
 	
    Traders said the shilling's fall, down for a 15th straight
session, had muddied prospects of a possible rate cut on June 5
when policymakers are set to meet, despite a
sharper-than-expected fall in inflation in May.	
    The year-on-year inflation rate eased to 12.22
percent from 13.06 percent in April.    	
    "The last time we saw this  (currency) movement, it stopped
at 107, so people are taking calculated risks," said Peter
Mutuku, a trader at Bank of Africa.	
    Traders said memories of last year when the shilling lost a
quarter of its value against the greenback was causing market
jitters.	
    That slump saw the markets lose confidence in a central bank
deemed to have acted too slowly to stop the rot, allowing
inflation to surge and the balance of payments deficit to widen.
 	
    The shilling is down 2 percent against the dollar so far
this year. Market players have said the losses would be higher
had the central bank not persistently mopped up excess liquidity
to help prop up the currency.	
    The bank absorbed 4 billion shillings through repurchase
agreements at a weighted average interest rate of  17.7 percent
on Wednesday.    	
    Falling yields on short term government paper is also
hurting the shilling, some traders said, because foreign
investor appetite is waning.	
    In stocks, the key NSE-20 Share Index was barely
changed, down 0.04 percent to 3,626.07 points as a market
correction slowed down a fifth straight session of losses.	
    Kenyan shares had rallied most of May, buoyed by investors
pouring back into equities after inflation showed signs of
falling steadily and yields on government debt fell sharply. 	
    "The rally was a bit over stretched on the up side and a
correction in on course now," said Rufus Mwanyasia, an analyst
at Tsavo Securities. 	
    "Bank were the biggest gainers from the rally, that's why
they are taking a hit as guys take profits."	
    Shares in Co-operative Bank fell for a second
straight day, down 4 percent to 13.10 shillings, while Barclays
Bank shed 1.2 percent to 12.80 shillings.  	
    Government bonds worth 2.87 billion shillings were traded,
up from 2.17 billion shillings on Tuesday, with the most
activity on a 12 year infrastructure bond. It traded at 12.6
percent.     	
 ...........................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:	
     	
($1 = 85.9500 Kenyan shillings)	
	
 (Editing by Richard Lough, Ron Askew)

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