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Kenyan shilling dips on month-end dollar orders

By on June 22, 2013

The Kenyan shilling weakened on Friday as importers bought dollars to meet end-month payments for their supplies, while shares broke a two-sessionrally. The shilling was posted at 85.85/95 to the dollar by the 1300 GMT market close, weaker than Thursday’s close of 85.65/85.
The currency has weakened 1.2 percent since east Africa’s biggest economy proposed to introduce a capital gains tax last Thursday. That move coincided with a broad sell-off of emerging market assets over the U.S. Federal Reserve’s hints that it will soon end its bond-buying stimulus programme.
The shilling is still 0.5 percent stronger so far this year.
“Towards end-month we’re going to have more demand than supply as importers come in to buy dollars,” said a trader at one commercial bank. However, traders said the central bank could intervene to sell dollars if the shilling fell past the 86.00 support level. “We may see the shilling break the 86.00 level,” said Bank of Africa in a daily note. “However, the central bank is expected to remain vigilant should the shilling’s depreciation gather unusual pace.” In stocks, the main NSE-20 share index lost 0.1 percent to 4,706.80 points, dragged lower by profit-taking on market heavyweights. Equity Bank, the country’s largest by assets, dropped 3.7 percent to 32.50 shillings, while mobile phone services company Safaricom shed 2.2 percent to 6.75
shillings. The two stocks accounted for 70 percent of Friday’s traded
In the debt market, bonds worth 3.9 billion shillings ($45.5
million) were traded, up from 1.9 billion shillings on Thursday.

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