NAIROBI: Kenya's shilling strengthened slightly on Wednesday as commercial banks that received hard currency inflows from the tea sector sold some dollars to square their positions.
The main stocks exchange index rose for the third straight day helped higher once again by East African Breweries shares.
The shilling closed at 91.45/55 to the dollar, compared with Tuesday's close of 91.55/65.
"It's mainly due to positioning. Interbank players are squaring their positions," said a trader at one commercial bank.
The central bank stayed out of the market on Wednesday after mopping up a total of 31 billion shillings ($338.58 million) in excess liquidity from the money markets so far this week.
Traders said central bank mopping up excess liquidity on Monday and Tuesday had also kept the shilling from weakening.
Absorbing liquidity makes it costlier to hold dollars, which supports the shilling.
The shilling saw some relief late last week, boosted by hard currency inflows that came into the market from coffee and tea earnings, and non-governmental organisations.
However, traders said the local currency was still expected to stay under pressure due to dollar demand.
On the Nairobi Securities Exchange, the main NSE-20 Share Index rose 16.96 points or 0.3 percent to close at 5,330.01 points.
East African Breweries Limited rose for a third consecutive session, closing up 1.3 percent at 324 shillings a share. The brewer will release its first half results on Friday and investors are anticipating improved earnings.
"It's more of speculation on the counter. People expect it to post good results," Agnes Achieng, research analyst at Sterling Investment Bank, said.
On the secondary market, government bonds valued at 122.6 million shillings were traded, down from 1.89 billion shillings on Tuesday.
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