Shilling firms, stocks end session higher

The Kenyan shilling gained ground on Friday to near a two-month high, helped by dollar inflows from offshore investors interested in buying government securities and tight liquidity, while stocks closed higher.

At 1330 GMT, commercial banks quoted the shilling at 102.40/102.50 to the dollar, compared with Thursday’s close of 103.00/10. The shilling last traded at its closing levels in mid-August. “It’s just foreign (dollar) flows mostly. They are coming in to take advantage of the higher yields (on Treasury bills),” a trader at one commercial bank said.

Traders said the shilling had also gained due to tight liquidity, partly due to falling interbank lending as a result of central bank putting privately-owned Imperial Bank under receivership earlier in the week.

“It’s people trying to fund themselves (in shillings). Liquidity is tight because of the Imperial Bank story. No one wants to lend right now,” another trader at a second commercial bank said. In recent weeks, the shilling has been supported by growing dollar inflows from foreign investors attracted by interest rates on government Treasury bills of more than 20 percent, far above what Kenya usually pays for short-term debt.

On the Nairobi Securities Exchange, the main NSE-20 Share Index was up 32.95 points, or 0.9 percent, to close at 3,901.13 points. On the secondary market, government bonds worth 2.26 billion shillings were traded, down from 3.17 billion shillings on Thursday. —Reuters