NAIROBI: The Kenyan shilling strengthened for a second straight session on Thursday dollars flowed in from offshore investors. Stocks edged lower.
The shilling closed at 88.90/89.00, stronger than Wednesday's 89.10/89.20.
A surge of dollars, most likely from offshore investors seeking to buy government debt, supported the local currency, said Eric Gathecha, a trader at I&M Bank.
"I'm thinking it must be for the government bonds coming up... we've seen quite a bit of (dollar) inflows," said Gathecha.
Kenya will auction a 12-year infrastructure bond worth 15 billion shillings ($168.73 million) on Oct. 22. The proceeds will be used to fund transport, energy and water projects, the central bank said last week.
The central bank drained also 6 billion shillings from the market using repurchase agreements 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.
A trader with a leading commercial bank had earlier said that companies paying their monthly taxes this week were buoying the shilling as well. "But it's a temporary support," he said.
On the stock market, the main NSE-20 share index fell 14.77 points or 0.3 percent to close at 5,290.09 points.
Shares in Safaricom, Kenya's largest telecommunications firm with a heavy weighting on the benchmark NSE-20 share index, eased 0.4 percent lower to 12.50 shillings on news that Equity Bank could soon become a major competitor in the mobile money market.
Equity, whose shares rose 2.5 percent to 50.50 shillings, was licensed by the telecoms regulator earlier this year to open a telecoms services arm. The bank has teamed up with the country's second-largest telecoms firm, the local arm of Bharti Airtel, to offer its service.
Equity, Kenya's biggest lender by depositors, has said it is issuing SIM cards to its 8.7 million customers in preparation for the service.
"Safaricom could be the biggest loser," said Silha Rasugu, a Genghis Capital research analyst.
In the debt market, bonds worth 3.1 billion shillings were traded, up from 1.3 billion shillings traded on Wednesday.
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