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UPDATE 1-Kenya shilling up vs dollar, rate decision eyed
June 5, 2012 / 4:07 PM / 5 years ago

UPDATE 1-Kenya shilling up vs dollar, rate decision eyed

 * Shilling seen supported by loan, CBK rate decision
 * Policymakers keen to fend off pressure on shilling
 * Stocks fall due to broad losses among blue chips

 (Adds markets close, stocks)	
 By Duncan Miriri and Beatrice Gachenge	
 NAIROBI, June 5 (Reuters) - The Kenyan shilling 
firmed slightly against the dollar on Tuesday after the
government received $240 million from international lenders, and
traders said it could gain further after the central bank held
interest rates for a sixth month.	
 The shilling finished the day at 85.80/86.00 per dollar,
slightly up from Monday's close of 85.90/86.10. The central
bank's rate decision was announced after markets had closed.	
 Policymakers left the benchmark interest rate 
unchanged at 18 percent for a sixth month in a row, saying
potential risks to inflation and the stability of the shilling
remained. 	
 "It was expected in the market that they would hold the rate
because they are still worried about the shilling which could
come under attack from external pressure like the euro zone
crisis," said Ignatius Chicha, head of markets at Citi Kenya.	
 The decision to hold the policy rate, which was accompanied
by a pledged to step up open market operations to mop up
persistently high liquidity, could draw hard currencies from
overseas investors into government debt and curb consumer
demand.	
 Chicha said sentiments were in favour of a firmer shilling
after the Treasury said it had received $240 million in a first
batch payment for a $600 million international syndicated loan.
 	
 The shilling has lost 1.1 percent in the year to date,
weighed on by the global flight to the safety of the dollar due
to concerns about a possible Greek exit from the euro and
falling yields on government debt at home.	
 Analysts said this year's fall by the shilling would have
been worse if the central bank had not been actively intervening
in the market to prop up the currency through regular repurchase
agreements (repo) to absorb liquidity and the sale of dollars.	
 During Tuesday's trading session, it sought to mop up 8
billion shillings ($93.1 million), received bids worth 5.8
billion and accepted them all at a weighted average interest
rate of 17.8 percent. 	
 In the stock market, the benchmark NSE-20 share index
 fell 0.48 percent to close at 3,635.86 points, weighed
on by falls across most blue chips.	
 Equity Bank shed more than 2 percent to close at
20.25 shillings while Nation Media also lost more than
2 percent to close at 160 shillings per share on a thin volume.	
 On the list of gainers for the day, Internet provider
AccessKenya led the charge, adding 8.57 to finish at
5.75 shillings, thanks to investor demand ahead of closure of
books for 1 for 20 bonus share issue mid this month.	
 In the bond market, securities worth 846 million shillings
were traded, down from the 1.67 billion shillings worth of bonds
traded in the previous session, as market participants awaited
the rate decision.   	
               .....................Shilling forward rates
                        .......................Cross rates
      ..................................Local contributors
        .......................Central Bank of Kenya Index
       .....................Kenyan Bonds contributor pages
                       ...............Treasury bill yields
     ..................Central bank open market operations
     .........................Horizontal repo transactions
      ,       ................Daily interbank lending rate
           .............................Kenya Bond pricing
          ..................Real time Africa economic data
 <ECI & AFR> ...........................African economic news
       .................................NSE-20 Share Index
      .................................NSE All Share Index
          ...........................FT NSE Kenya 15 Index
          .......................... FT NSE Kenya 25 Index
  SPEED GUIDES:
                                 
         
 ($1 = 85.9500 Kenyan shillings)	
	
 (Additional reporting by Kevin Mwanza; Editing by Ron Askew)	
 

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