NAIROBI: The Kenyan shilling strengthened on Wednesday on dollar inflows from charities, while stocks were steady.
The shilling closed at 89.10/89.20, compared with Tuesday's close of 89.30/89.40.
Duncan Kinuthia, head of trading at Commercial Bank of Africa, said foreign missionaries and non-governmental organizations with operations in Kenya were a major source of hard currency during the session.
"They always need to sell to fund local operations, so the money comes in foreign currency and they have to convert it into local currency," Kinuthia said.
He said demand for dollars had eased from telecommunications, energy, and oil companies, which are usually the most consistent buyers.
"They usually have more or less a fixed amount that they have to buy... and when they do that, they don't need to buy more, especially if the currency is moving against them," Kinuthia said.
Kenya's central bank sought to mop up 5 billion shillings ($56.05 million) from the market on Wednesday using repurchase agreements (repo) and term auction deposits.
The bank regularly uses repo and term auction deposits to manage liquidity in the market, lending support to the shilling by making it slightly more expensive for banks to hold dollars.
The shilling has been under pressure from the dollar in recent weeks after frequent attacks blamed on Islamists led to a slump in tourism, a key source of foreign exchange for Kenya.
On the stock market, the main NSE-20 share index was just a fraction higher, adding 5.74 points to close at 5,304.86 points.
East African Cables announced an interim dividend of 0.50 shillings per share, sending its stock 6.7 percent higher to close at 16.55 shillings. The dividend is to be paid out to shareholders in December.
"A few days before the books closure date is usually when you see so much activity on a stock," said Agnes Achieng, research analyst at Sterling Investment Bank.
In the debt market, bonds worth 1.3 billion shillings were traded, up from 1.1 billion shillings traded on Tuesday.
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