March 20, 2012 / 3:17 PM / 6 years ago

UPDATE 1-Kenyan shilling slips vs dollar, stocks pare gains

* Shilling seen supported by offshore bond buyers
    * Central bank dollar buying FX to boost reserves
    * Kenya Airways cash call to subdue bourse activity

 (Adds markets close, stocks)	
    By Kevin Mwanza	
    NAIROBI, March 20 (Reuters) - Kenya's shilling 
slipped on Tuesday on interbank dollar purchases, but traders
said it should get support from foreign investors selling
dollars after a one-year Treasury bond auction was
oversubscribed.	
    Heavy demand pushed the yield on the one-year bond down 160
basis points to 16.432 percent at Tuesday's sale compared with
the previous auction, with the 10 billion shilling ($121
million) bond offer receiving bids worth 15.1 billion shillings.
 	
    On Wednesday, the central bank will sell 91- and 182-day
Treasury bills for 7 billion shillings.	
    At the 1300 GMT markets close, commercial banks quoted the
shilling at 82.80/83.00 against the dollar, weaker than Monday's
close on 82.50/70.	
    "Late interbank buying of dollars weakened the shilling at
close," said Duncan Kinuthia, head of trading at Commercial Bank
of Africa.	
    High yields on government debt in the east African region's
biggest economy have helped to prop up the shilling, which is up
2.7 percent against the dollar in the year to date.	
    However, traders said persistent dollar buying by the
central bank to prop up reserves could weigh on the local
currency.	
    The central bank, which was blamed by some for letting the
shilling tumble through a series of record lows last year, has
been buying hard currencies to beef up its reserves.	
    "The market expects to see some greenback inflows from the
bond auction today, but not as much as we've seen before because
the yields have come down significantly," said Dickson Magecha,
a trader at Standard Chartered Bank.	
    In stocks, the main NSE-20 Share Index pared
previous day's gains, edging down one percent to 3,285.51 points
dragged down by banking sector stocks.	
    "Investors are still seeking dividends and that explains the
high turnover. Huge sale from banking sector stocks dragged the
index down," said Samuel Gichohi, an analyst at NIC  Securities.	
    "The market is likely to stagnate once the Kenya Airways
rights issue opens as investor shift attention there."	
    Kenya Airways, one of the leading airlines in
Africa, is scheduled to open its $250 million rights issue on
April 2 to finance its expansion plans. It fell 3.0 percent to
14.50 shillings a share on Tuesday.	
    Shares in National Bank of Kenya tumbled 8.9
percent to 17.45 shillings a day after the lender posted a 9
percent drop in its pretax profit for last year, to 2.44 billion
shillings, hurt by a rise in provision for bad debts.
 	
    In the secondary bond market, government and corporate bonds
worth 2.35 billion shillings ($28 million) were traded, up from
2.18 billion shillings on Monday.   	
               ...........................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 = 82.7500 Kenyan shillings)	
	
 (Editing by Yara Bayoumy; Editing by Ruth Pitchford)

Our Standards:The Thomson Reuters Trust Principles.
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