October 23, 2013 / 8:35 AM / in 4 years

Tight liquidity keeps Kenyan shilling steady

NAIROBI, Oct 23 (Reuters) - The Kenyan shilling was
steady on Wednesday, underpinned by a tightening liquidity in
money markets caused by this week's annual payments of bonuses
to tea farmers.
    At 0726 GMT, commercial banks posted the shilling at
84.70/80 to the dollar, barely changed from Tuesday's close of
84.70/90.
    Tea bonuses, usually paid to small-scale farmers in
mid-October, shift liquidity to a few big banks used for
disbursements, leaving other banks with little liquidity.
    Tea farmers will receive 51.3 billion shillings ($605.7
million) in bonuses, paid by their national co-operative, the
Kenya Tea Development Agency.
    Traders said the outlook for liquidity was poor.
    "I don't think it will improve soon because on Monday we
expect 16 billion shillings to go out in bond payments," said
Nahashon Mungai, a trader at Kenya Commercial Bank.
    Payments for a 12-year infrastructure bond auctioned this
month are due on Oct. 28. 
    The liquidity squeeze has pushed up overnight lending rates,
with the weighted average interbank rate rising to 11.1241
percent on Tuesday from 11.0672 percent previously, having risen
gradually from 6.9383 on Sept. 17. 
    Tight liquidity supports the local currency by making it
slightly more expensive for banks to hold long dollar positions.
    Traders said they expected the shilling to firm towards a
four-month high of 84.50 against the dollar, last touched on
Oct. 8, before the end of this week.
               ...........................Shilling spot rates
                  .....................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 = 84.7000 Kenyan shillings)

 (Reporting by Kevin Mwanza; Editing by Duncan Miriri and Pravin
Char)

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