Kenya shilling weakens

Shilling holds steady against the dollar
Shilling holds steady against the dollar

The Kenyan shilling weakened on Tuesday due to increased dollar demand while the stock exchange’s main index closed just above a three-year low.

At close of trade, commercial banks quoted the shilling at 103.25/35 to the dollar, compared with Monday’s close of 102.90/103.00.

Earlier in the session it had touched 103.50/60 before reversing its losses, traders said.

The shilling, which has lost 12 percent against the dollar this year, firmed in the past two weeks due to dollar inflows from offshore investors attracted by the interest rates of more than 20 percent on government Treasury bills.

On the Nairobi Securities Exchange, the main NSE-20 Share Index was down 12.79 points, to close at 3,978.70 points.

The index hit a three-year low when it closed at 3,971.68 points on Oct. 8, 2012.

Virginia Wairimu, research analyst at Suntra Investment Bank, said among the companies whose shares closed lower were commercial banks, with investors anticipating slower performances in their upcoming third quarter earnings results.

“I don’t think investors are anticipating much better performances for any company in Kenya right now, if you look at interest rates,” she said.

“I think there is a lot of negativity when it comes to the economy and the first people to be hit are the financial institutions.”

The weighted average yield on the benchmark 91-day Treasury bills stands at 21.353 percent at last week’s sale from 20.637 percent a week earlier.

On the secondary market, government bonds valued at 511.50 million shillings were traded, compared to 162.55 million shillings on Monday.

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