By Kevin Mwanza

The shilling was steady against the dollar on Friday, underpinned by tight liquidity in the market as investors paid for government debt auctioned this week and companies made tax payments.

At debt auctions this week the Central Bank sold a combined Sh23.2 billion worth of a new 15-year bond, and six-month and three-month Treasury bills.

Traders said payment of value-added taxes (VAT), which fall due on the 20th of every month, had tightened liquidity in the market as companies withdrew money from banks.

“(Liquidity) could be a bit tight on the money markets because of tax and bond payments falling due,” said Christopher Muiga, a senior trader at Kenya Commercial Bank.

At the market close, commercial banks quoted the shilling at Sh84.80/90 per dollar, barely changed from Thursday’s close of 84.75/95.

The shilling is 0.4 per cent up against the dollar so far this year.

Straight session

On the money market, the weighted average interbank rate inched up for the third straight session to 6.8 per cent on Thursday, from 6.7 per cent on Wednesday.      The Central Bank was also in the repurchase agreement market to mop up Sh5.5 billion, but only took out Sh1.75 billion in 7- and 14-day repos.      Traders said the shilling could face depreciation pressure next week from importers buying dollars to meet their end-month purchases.

 “The shilling may struggle to cross 85.00, but in the long run we could see it above that,” Muiga said.

Technical analysis charts showed the shilling’s support level at 85.00, and traders said if it were to cross that, it could weaken to touch the 85.50 level.     On the stockmarket, the main NSE-20 share index dipped 0.2 per cent to 3,927.44 points.

 Shares in Kenya Airways, one of Africa’s leading airlines, extended losses, sliding 5.7 per cent to an eight-year low of 12.20 shillings.

“Apart from staff cuts, Kenya Airways is still a long way to containing its high operational cost. Competition on local routes by FastJet is also making investors a bit jittery,” said Rufus Mwanyasia, an analyst at Tsavo Securities.

      — Reuters