Kenya shilling steady, stocks down for third straight session

Kenya’s shilling was steady on Tuesday, as tight liquidity helped it regain ground from earlier in the session when it came under pressure from increased importer demand for dollars, while stocks were down slightly.

At close of trade , commercial banks quoted the shilling at 105.25/35 to the dollar, compared with Monday’s close of 105.20/30.

Earlier in the day it weakened to touch a low of 105.35/55.

“It has come off a bit. Liquidity is still very tight, very acute,” a senior trader at one commercial bank said.

In a sign of the liquidity squeeze, the weighted average interbank lending rate rose to 25.8379 percent on Monday from 25.6165 percent on Friday, with overnight lending rates hitting a high of 28.00 percent.

Traders however said the shilling was expected to remain under pressure due to dollar demand from energy sector importers.

Demand tends to rise at the end of the month as companies meet contract payment deadlines. The shilling, which has lost about 14 percent of its value since the start of the year, has also been helped in recent days from inflows of foreign exchange from offshore investors seeking to buy government securities, where yields have been rising.

On the Nairobi Securities Exchange, the main NSE-20 Share Index was down – for a third straight session – by 16.92 points, or 0.4 percent to close at 4,189.22 points.

On the secondary market, government bonds valued at 301.65 million shillings ($2.86 million) were traded, from 16.1 million shillings on Monday.