Kenyan shilling softens to new 3-year low, stocks rise

NAIROBI (Reuters) – The Kenyan shilling softened to a three-year low on Thursday due to strong dollar demand by companies seeking to settle their bills at the end of the month, traders said.

At close of trade, commercial banks quoted the shilling at 94.60/70 to the dollar, from Wednesday’s close of 94.55/65.The shilling weakened to 94.75/85 in intraday trade, lows last seen in November 2011, before recovering amid concerns the central bank may intervene and sell dollars, traders said.

One trader at a Nairobi-based commercial bank said demand for the dollar was coming from across the sectors, including telecoms and energy, due to end-month bill payments.”We are still seeing some interest from the oil sector particularly,” added a second trader.

The local currency has also been hit by falling foreign exchange revenues from tourism after a number of militant attacks that kept visitors away and by a decline in horticulture earnings blamed on uneven rain.Traders said the shilling, which has lost 4.2 percent against the dollar this year, may stay in a 94.3-95.0 range in the next few days.

In the stock market, the benchmark NSE-20 share index .NSE20 rose by a fraction, gaining 30.32 points or 0.6 percent to close at 5,091.43 points.Analysts said the index edged higher mainly due to a 0.6 percent rise in the shares of Safaricom, the bourse’s biggest stock by market capitalisation, which hit a new all-time high of 17.40 shillings.

Shares in Kenya’s biggest telecoms operator were buoyed by a favourable outlook for its annual results due to be announced in early May.

“People are anticipating strong results and continue to push it up,” said independent investor Aly-Khan Satchu. “Safaricom is underpinning the stock market right now,” he said, adding that there were two buyers for every seller of Safaricom shares.

On the fixed income market, government bonds valued at 1.27 billion shillings ($13 million) were traded, compared with 714 million shillings on Wednesday.