Kenyan shilling stable, main share index up

By Macharia  Kamau

Nairobi, Kenya: The Kenyan shilling eased against the dollar yesterday after its recent gains, while the benchmark 20-share index rose for the 11th straight session.  

At market close, commercial banks quoted the shilling at 85.39 to the dollar, compared with Wednesday’s close of 84.96. 

The shilling has strengthened over the last two weeks to hit a four-month high Tuesday where it traded at a mean of Sh84.90 against the dollar.

The currency traded at over Sh87.5 throughout September and started strengthening at the beginning of this month, which has mostly been attributed to foreign flows as investors buy into an infrastructure bond auctioned by the Central Bank of Kenya (CBK).

The government plans to raise Sh20 billon to finance infrastructure projects.

Christopher Muiga, head of trading at the National Bank of Kenya said the shilling could strengthen to Sh83 in the coming days and later on trade within the range of Sh83 and Sh87.

“The performance is based on the infrastructure bond which has attracted foreign investors…the bond does not attract withholding tax and is hence a preference among investors,” said Muiga.

“Another factor that has seen the shilling strengthen is a rally at the securities exchange which is mostly due to foreign inflows.”

The strengthening of the shilling has been witnessed despite the recent terror attack on the Westgate Shopping Mall and the ongoing case at the International Criminal Court against Deputy President William Ruto. Both incidences were expected to see a dip in the shilling as well as foreign investors shying away from the Nairobi Securities Exchange.

On the Nairobi Securities Exchange, the main NSE-20 Share Index has been on an upward trend for the last two weeks and yesterday reached 4,947.00 points, compared to a 4,750 range towards the end of September.

Debt market

 The government is seeking to borrow Sh20 billion from the local debt market to finance part of its infrastructure programmes for the current financial year.

The amount to be raised through a 12-year infrastructure bond will be used to partially finance water, sewerage and irrigation projects whose costs are estimated at Sh10.11 billion, transport at Sh14.27 billion and energy at Sh11.63 billion.

National Treasury Cabinet Secretary Henry Rotich said recently that it would require sustained expenditure of $4 billion (Sh348 billion) per year over the next 10-years to meet the country’s infrastructure needs as envisioned in Kenya Vision 2030 development blueprint.