NAIROBI: The Kenyan shilling firmed on Wednesday helped by hard currency inflows from offshore investor seeking to buy government bonds, while stocks fell on profit-taking.
The shilling closed at 90.35/45 to the dollar, compared with Tuesday's close of 90.55/65.
"It must have been to lack of (dollar) demand... Also, some interest on the bond side," Julius Kiriinya, a trader at African Banking Corporation, said.
The central bank auctioned a new two-year Treasury bond and a re-opened 15-year bond worth a total 20 billion shillings ($221.24 million) on Wednesday, attracting 27 billion shillings in bids from investors.
Traders said this supported the shilling as foreign investors converted hard currency to buy the bonds.
The central bank's action to mop up 500 million shillings also buoyed the local currency. Absorbing excess liquidity makes it relatively more expensive to hold long dollar positions, which lends support to the shilling.
Traders forecast the shilling - which has lost 4.8 percent to the dollar so far this year - to trade in the 90.00 to 90.60 range against the dollar in the next few days.
On the Nairobi Securities Exchange, the main NSE-20 Share Index fell 0.85 percent 43.09 points to close at 5,048.21 points.
Silha Rasugu, research analyst at Genghis Capital, said there was profit-taking on various stocks that had made significant gains over the past year.
"With the risk of CGT (capital gains tax) coming in January, there is a bit of precaution by investors, especially the longer term investors, to secure gains they've made so far," he said of the tax which takes effect on Jan. 1.
British American Tobacco was down 3.1 percent to 902 shillings, while the country's biggest telecoms firm Safaricom shed 3.6 percent to end at 13.40 shillings.
On the debt market, government bonds worth 1.93 billion shillings were traded up from 1.08 billion shillings on Tuesday.
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