Wed Jan 4, 2012 10:40am EST
* Central bank gets bids for half of $59 mln repo
* Tea sector dollar inflows likely to support
* Shares edge down, more falls seen
(Adds stocks, market close)
By Kevin Mwanza
NAIROBI, Jan 4 (Reuters) - The Kenyan shilling
fell 2.3 percent on Wednesday due to heavy dollar demand after
the holidays, stoking concerns that last year's extreme
volatility in the exchange rate may persist into 2012, while
stocks edged down.
The central bank sought to mop up 5 billion shillings ($58.5
million) from the market during the session through repurchase
agreements, accepting all the bids of 2.5 billion shillings
($29.26 million) at a weighted average rate of 18 percent.
At the 1300 GMT market close, commercial banks quoted the
shilling at 87.50/70 against the dollar, a level it last touched
on Dec. 14 and weaker than Tuesday's close of 85.50/70.
"Importers who held off making orders during the holidays
are back buying dollars, especially from the petroleum sector,"
said Peter Mutuku, head of corporate trading at Bank of Africa.
The shilling recovered to a nine-month high of 82.80 per
dollar on Dec. 16 from a record low of 107 hit in October after
the central bank raised its key lending rate four times to 18
percent in December to fight rising inflation and support the
currency.
Despite the fresh weakness in the shilling, traders said
they expected central bank to hold its benchmark rate at the
next rate setting meeting scheduled for Jan. 11.
Traders said they expected dollar inflows from the tea
sector, a major hard-currency earner for the east African
nation, to provide some support to the shilling after the weekly
tea auction resumed on Wednesday.
Central bank had been selling dollars in the last three
sessions as it seeks to stay ahead of the curve to prevent last
year's volatility, which caused widespread anger due to rising
import costs, traders said.
"CBK has been trying to shore up the shilling by selling
dollars, but demand seem to be too much," said Julius Kiriinya,
a trader at African Banking Corporation.
At the Nairobi Stock Exchange, the benchmark NSE-20 Share
Index edged down 0.3 percent to 3,203.35 points.
Traders said they expected last year's bear run to gather
pace in 2012 exacerbated by high interest rates in the market
and a general election scheduled for the second half of the
year.
"The bear run that we saw last year will get stronger this
year as election fears keep away foreign investors and tight
credit conditions stifles local investors," said Ronald Lugalia,
an analyst at Afrika Investment Bank.
Share in Equity Bank, the biggest bank in Kenya by
customer terms, shed 1.2 percent to 16.55 shillings, while sugar
cane grower and miller Mumias was down one percent to
5.20 shillings per share.
In fixed income, corporate and government bonds worth 1.7
billion shillings ($19.9 million) were traded, down from 2.05
billion shillings on Tuesday.
...........................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
