Kenyan shilling weaker on bomb blasts, shares up

Friday, May 16, 2014
By Richard Lough and Drazen Jorgic

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NAIROBI, May 16 (Reuters) - The Kenyan shilling lost ground against the dollar on Friday, hurt by back-to-back bombings in the capital Nairobi which knocked market confidence in the local currency, while shares rose.

At the 1300 GMT market close, the shilling was at 87.50/60 to the dollar, weaker than the previous session's 87.34/45 close.

Andlip Nazir, senior trader at I&M Bank, said the currency has come under pressure from a spate of negative news, including the latest blasts in which at least 10 people were killed and close to 70 wounded.

Tourist arrivals, a key source of hard currency, have been cut by frequent gun and grenade attacks after Kenya intervened against Islamist militants in neighbouring Somalia. Britain, the United States and other Western governments have warned holidaymakers against visiting Kenya.

"These travel advisories are being issued left, right and centre. Nothing positive is coming out of the market," Nazir said.

Frequent liquidity mop-ups by the Central Bank of Kenya have limited the shilling's falls but traders say the currency is likely to come under pressure again next week.

"CBK has been trying to mop up but that's had little effect on the shilling," Nazir added. "The direction remains for a weaker shilling."

The benchmark NSE-20 Share Index gained 0.4 percent to close the session at 4,967.57 points, lifted higher by Kenya's leading telecoms firm Safaricom.

Safaricom hit an intra-day high of 13.20 shillings before easing off to end the day at 12.85 shillings, up 2 percent on

Thursday's closing price. The stock accounted for 57.8 million of the 70.8 million shares traded.

Safaricom reported a 23.8 percent jump in its annual core profits earlier this week, raising its dividend by 52 percent to 0.47 shillings per share.

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