Tuesday, 24 March 2015 20:15
NAIROBI: Kenya’s shilling strengthened on Tuesday, helped by dollar flows from offshore investors preparing to buy a government bond due to be auctioned on Wednesday.
The main shares index fell for a third straight day.
At close of trade, commercial banks quoted the shilling at 91.70/80 to the dollar, from Monday’s close of 91.90/92.10.
Traders said tight shilling liquidity and dollar inflows from offshore investors seeking to buy a 12-year infrastructure bond worth 25 billion shillings ($ 272 million) had buoyed the local currency.
“I think it is because of tight liquidity in the money market,” Robert Gatobu, trader at Bank of Africa, said.
“Secondly we are seeing good inflows coming in especially from foreign investors who want to line themselves with the coming infrastructure bond.”
Corporate demand for dollars, which usually picks up towards the end of the month as payments fall due, could emerge later in the week and possibly weaken the shilling, traders said.
Traders forecast the shilling to trade in the 91.50-92.00 for the rest of the week.
On the Nairobi Securities Exchange, the main NSE-20 Share Index was down 11.07 points, or 0.2 percent, to close at 5,254.60 points.
Stock analysts attributed the drop to a market correction, continuing a pattern that started early this month when the index scaled a seven-year peak.
“We have noticed the market is still on a correction mode,” Virginia Wairimu, research analyst at Suntra Investment Bank.
On the secondary market, government bonds valued at 642 million shillings were traded, up from 283 million shillings on Monday.
Copyright Reuters, 2015
