Kenyan shilling weakens, bank stocks push shares higher
07 January 2014, 11:06
Nairobi - The Kenyan shilling weakened on Monday due to dollar demand from the manufacturing and energy sectors and traders said it would remain under pressure in coming days, while the stock exchange's main index closed higher.
At close of trade at 1300 GMT, commercial banks quoted the shilling at 86.95/87.05 to the U.S. dollar, compared with Friday's close of 86.80/87.00. The shilling touched an intra-day low of 87.10/20 earlier in the session.
"It's been a bit of a ping-pong day," said a senior trader at one commercial bank.
"We are waiting for the majority of the liquidity to come back to the market, then we will get a feel of what's going on."
Earlier in the session, traders said the shilling had weakened on the increased corporate demand for dollars.
"The market has opened on a weaker note after real demand from corporate clients pushed it up. (Demand for dollars is) from manufacturing and energy," said Sheikh Mehran, a senior trader at KCB Bank Group.
Traders said they expected the shilling to trade in a range of 86.90 to 87.50 in the days ahead.
Technical analysis of the 14-day and 50-day weighted moving averages suggested the shilling would continue to weaken.
The shilling has shed 0.4 percent against the dollar since the start of 2014.
BANK STOCKS GAIN
On the Nairobi Securities Exchange, the main NSE-20 Share Index was up 39.39 points, or 0.8 percent, to close at 4,940.51, due especially to gains by banks and by telecommunications firm Safaricom.
Equity Bank was up 3.9 percent at 33.00 shillings per share after earlier surging 4.7 percent to 33.25 shillings. Kenya Commercial Bank closed the session up 1 percent at 48.50 shillings after rising 2.6 percent to 49.25 shillings.
Safaricom, which is typically the most traded stock on the exchange, closed 2.3 percent higher at 11.05 shillings a share after jumping 3.2 percent to 11.15 shillings in earlier trade.
"A lot of investors have decided to come in to take in long positions for the year," said Daniel Kuyoh, research analyst at Kingdom Security. He said investors expected banks to report solid full year results, which are due by the end of March.