SNAIROBI: The Kenyan shilling strengthened on Thursday as foreign investors bought Kenya's high-yielding debt. Stocks were down.
At the 1330 GMT close, commercial banks posted the shilling at 103.00/10, gaining from Wednesday's closing 103.25/35.
"The shilling is firmer on the back of increasing yield appeal" from the central bank's Treasury bill auction on Wednesday, said a trader at a major commercial bank in Nairobi.
At Wednesday's auction, the weighted average yield on Kenya's 364-day Treasury bills jumped to 21.498 percent from 20.695 percent last week. The yield on the 182-day Treasury bill rose to 21.607 percent from 20.331 percent last week.
The trader said that the underlying problems that have steadily weakened the shilling against the dollar for much of the last year are still present. The shilling could return to the 104 level by next week, he said.
The shilling has been under pressure from the dollar's strength, Kenya's high current account deficit and lack of tourist trade after a spate of attacks by Somalia al Shabaab insurgents.
The Nairobi Securities Exchange's main NSE-20 Share Index was down 30.21 points to close at 4041.35.
On the secondary market, government bonds valued at 299 million Kenyan shillings were traded, down from 1 billion shillings on Wednesday.
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