Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.

Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire 24.com network.

Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.


CBK action lifts shilling; shares down

28 March 2014, 08:25

Nairobi - The Kenyan shilling strengthened against the dollar on Thursday after the central bank moved to take excess liquidity out of the market. Shares drifted lower.

At the 1300 GMT close of the market, leading commercial banks posted the shilling at 86.40/50 per dollar, up from Wednesday's close of 86.60/70.

The central bank took 6.35 billion shillings out of the market through a repurchase agreement (repo) at a weighted average interest rate of 8.248 percent. It had sought to mop up 10 billion shillings but only got bids for 6.35 billion shillings ($73.09 million).

"Central bank came in with a repo which drained excess liquidity from the market, thereby making the shilling strengthen," said Sheikh Mehran, a trader at KCB Bank.

The central bank's action followed a drop in the overnight borrowing rate on the interbank market to 8.1425 percent on Wednesday from 8.4044 percent the previous day.

Lower short-term interest rates usually make it slightly cheaper for banks to fund long dollar positions, exposing the shilling to downward pressure.

On the stock market, the benchmark NSE-20 share index, edged down 0.2 percent to close at 4,958.62 points.

"Generally, the market looked weak," said Eric Musau, a research analyst at Standard Investment Bank.

Shares in national carrier Kenya Airways dropped 3 percent to close at 12.20 shillings each, after reports in local newspapers that it wanted exemptions from sales tax on purchases of spare parts for its aircraft, which have been driving up its costs.

"They are trying to get tax concessions, but that communication reaching the market is being viewed negatively," Musau said.

National Bank was the biggest loser, shedding 8 percent to close at 28.50 shillings a share, as the market continued to react to its full-year earnings report, issued the previous day.

National plans to raise 10 billion to 13 billion shillings in a cash call to fund expansion. [ID:nL5N0MN0UB]

"That (cash call) remains the key issue. It is going to be under pressure until that transaction is completed," said Musau.

In the debt market, bonds worth 2.17 billion shillings were traded, up from the previous day's 1.2 billion shillings.

- Reuters


Read News24’s Comments Policy

Comment on this story
Comments have been closed for this article.

Read more from our Users

Submitted by
Jayne Zack
I am in ODM to stay, Busia Depu...

Busia Deputy Governor Kizito Wangalwa told Deputy President William on the face that he was in the Orange Democratic Movement to stay. Read more...

Boda Boda operators in Bahati rai...

Motorbike Boda Boda operators from Bahati Sub county on Tuesday took to the streets of Nakuru’s CBD lamenting over what they term is harassment by patrol police officers in the area. Read more...

Submitted by
Gabriel Ngallah
Human Rights activist lives in fe...

The Human rights fraternity in Mombasa is currently living in fear after the home of one of the vocal human rights champion was invaded on Monday night. Read more...

Submitted by
kel wesh
Poisonous milk powder siezed by K...

The Kenya Revenue Authority has seized two containers with illegal milk powder which had been declared as gypsum board at Mombasa port. Read more...

Submitted by
William Korir
Be ready for protests, Raila warn...

Expect protests if meddling with Auditor General continues, Raila Odinga has said. Read more...

Submitted by
Kenya says will return to interna...

Kenya will return to international markets to borrow when it feels the time is right, National Treasury Cabinet Secretary Henry Rotich said on Tuesday. Read more...