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Kenya shilling weakens

23 July 2013, 18:12

The Kenyan shilling weakened on Monday as importers bought dollars to meet end-month payments for their supplies, while shares ended a two-week winning streak.

The shilling was posted at 87.15/25 to the dollar at the 1300 GMT market close, weaker than Friday's close of 86.95/87.15.

"We still expect it to weaken further as end-month (dollar) demand comes in from this week," said Bank of Africa in a daily note.

The shilling has faced headwinds this month from lower yields on local government securities and unrest in Egypt, one of the biggest buyers of Kenyan tea. Tea is the country's top foreign exchange earner.

Last week the central bank sold an unspecified amount of dollars on Monday and Tuesday, helping the shilling off a five-month low of 87.55/75.

The local currency is 1 per cent weaker so far in 2013.

In stocks, the main NSE-20 share index ended flat at 4,807.41 points.

The index had gained a total 5.1 per cent over nine straight sessions, helped by foreign investors returning to the bourse before companies' half-year earnings reporting season.

"There is still some upside potential across selected stocks and we may see the index rise further hinged on strong earnings from companies in the half year," said Ronald Lugalia, an analyst at Afrika Investment Bank.

Mobile phone service provider Safaricom, the most capitalised stock on the bourse, shed 2.1 per cent to Sh7.10 per share.

The chief executive officer, whose contract was extended by two years, said the firm will pay out more in dividends this year due to lack of suitable acquisition targets.
In the secondary bond market, debt worth Sh1.6 billion ($18.4 million) was traded, up from Sh601 million on Friday.

- Reuters


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