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Kenya shares fall to one month low

25 November 2011, 09:41


NAIROBI Nov 24 (Reuters) - Kenyan shares slipped to a one-month low on Thursday, dragged down by worries over the impact of high interest rates on banks, while the shilling was barely changed against the dollar.

The main NSE-20 Share index finished nearly 1 percent down, losing 32.07 points to 3,288.70 and close to the 3,277.50 points where it closed on Oct. 14.

Traders blamed the fall in stocks on banks as the market worried about the impact of higher lending rates, which shot up in October after policymakers shifted to a more hawkish stance to tame inflation and volatility in the currency.

"The high interest rates seem to be affecting banksthanks' businesses and defaults are likely to go up," said a trader with a leading investment bank.

Barclays Bank of Kenya fell 4.6 percent to end at 12.50 shillings per share, Equity Bank closed 1.3 percent lower at 18.75 shillings a share while Kenya Commercial Bank, the largest bank by assets, shed 2.4 percent to close at 16.05 shillings.

In the foreign exchange market commercial banks posted the shilling at 90.15/25 to the dollar at the 1300 GMT close of trade, barely moved from the previous day's close of 90.20/50.

Traders said the shilling was poised to strengthen further against the dollar in the weeks ahead due to a liquidity crunch in the market that has sent rates soaring and supported a 15 percent gain for the Kenyan currency since mid-October.


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