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Kenyan shilling flat as caution sets in, shares fall

Kenyan shilling flat as caution sets in, shares fallNAIROBI: Kenya’s shilling was steady at near 3-year lows on Tuesday, as traders acted carefully on prospects of the central bank pumping in dollars to cut any volatility.

The benchmark shares index fell on profit-taking.

The shilling closed trade at 92.05/15 against the dollar, unchanged from Monday’s close. The central bank sold an undisclosed amount of dollars on Monday when the shilling touched its lowest level since Nov. 2011.

“We were largely unchanged as market players now take caution owing to intervention by the Central Bank of Kenya,” said a currency trader at a leading commercial bank.

Traders who build long dollar positions usually get caught out if the currency firms after a central bank intervention.

Concerns about further intervention were deepened by similar action in neighbouring Uganda where the central bank sold dollars on Monday to prop up the Ugandan shilling after it slid, said the trader.

The Kenyan currency has fared better than the Ugandan one this year, losing 1.83 percent against the greenback compared with a 4.66 percent fall for the Ugandan shilling.

The drops have partly been driven by a globally firmer dollar on expectation the US Federal Reserve would hike rates faster than expected.

In the stock market, the benchmark NSE-20 share index fell 0.5 percent to close at 5,313.84 points, driven by profit-taking especially by investors abroad.

“Foreign investors were net sellers and they have been sellers for quite a while,” said Stella Wambugu, a research analyst at Standard Investment Bank.

The index has risen just once in the past ten sessions as investors started booking gains after it hit a seven-year peak.

In the debt market, bonds worth 779 million shillings ($ 8.47 million) were traded, down from Monday’s volume of 1.4 billion shillings.

Copyright Reuters, 2015

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