Thursday, 26 March 2015 20:15
NAIROBI: Kenya’s shilling weakened on Thursday, undermined by importer demand and the International Monetary Fund’s view that the local currency was over valued.
The main shares index fell on profit-taking.
At close of trade, commercial banks quoted the shilling at 92.00/10 to the dollar, from Wednesday’s close of 91.75/85.
The IMF country representative told Reuters the shilling was over valued by about 5 to 10 percent to the dollar but demand for imports and other market pressures were likely to weaken it gradually so no policy change was needed.
Traders said this also influenced the shilling.
“I think it’s just pick-up in corporate demand, and I think also there was a statement that we saw on Reuters that said the IMF thinks the Kenya shilling was over valued,” Duncan Kinuthia, head of trading at Commercial Bank of Africa, said.
The shilling was helped in recent sessions by expectations of offshore interest in this week’s 12-year infrastructure bond auction. Bids worth more than twice the 25 billion shillings offered were received at Wednesday’s sale.
The shilling was likely to remain in a range of 91.50 to 92.30 in the next few days, traders said.
On the Nairobi Securities Exchange, the main NSE-20 Share Index fell 22.35 points, or 0.43 percent, to close at 5,252.74 points, after rising on Wednesday.
Daniel Kuyoh, research analyst at Kingdom Securities, said the drop was a continuation of a correction that started early this month when the index hit a seven-year peak.
“The main drivers of this is a lot of rebalancing of portfolios, mainly institutional investors; selling off to book gains that they have made in the last year or so,” Kuyoh said.
On the secondary market, government bonds worth 1.71 billion shillings ($ 18.60 million) were traded, up from 735.2 million shillings on Wednesday.
Copyright Reuters, 2015
