NAIROBI, Jan 26 (Reuters) – Kenya’s shilling closed firmer for the third straight session on Thursday, unphased in the final minutes of trading by the finance minister’s resignation following his indictment earlier this week for crimes against humanity.
A currency dealer counts Kenya shillings at a money exchange counter in Nairobi October 23, 2008. REUTERS/Antony Njuguna
Pressure had piled up on Uhuru Kenyatta to quit the Treasury after the International Criminal Court ruled on Monday he must face trial for crimes committed during violence after a disputed 2007 poll.
“The resignation shows there is still some integrity in the system and that will be shilling positive. But there will still be uncertainty over the new appointments,” said Dickson Magecha, a trader at Standard Chartered Bank.
In a statement, the presidency said Robinson Githae, a lawyer and cabinet minister for metropolitan development, was named acting finance minister.
At the 1300 GMT market close, commercial banks quoted the shilling at 84.80/85.00 against the dollar, nearly one percent stronger than Wednesday’s close of 85.50/70.
Market players said tight liquidity and dollar inflows from offshore clients had supported the shilling on Thursday.
The Central Bank of Kenya had sought to mop up 5 billion shillings through repurchase agreements, but received no bids.
Determined to keep the shilling on an even keel after its collapse last year, the central bank has been busy absorbing liquidity and selling hard currency.
“Markets will be cautious after the change of the top guy at the finance ministry. But I think we will be able to take it in our stride,” said a trader with a commercial bank.
Traders said high yields on Kenyan government securities were enticing foreign investors, leading to high subscription rates in recent auctions and injecting dollars into the market.
In fixed income, yield on the 91-day Treasury bills fell to 20.614 percent at Thursday’s oversubscribed auction from 20.769 percent last week, as investors keen to lock in high yields outstripped the amount offered.
In the money market, the weighted average interbank lending rate rose to 21.1 percent on Wednesday, from 20.3 percent on Tuesday, pushed by banks competing for the few shillings in the market after central bank tightened liquidity through repos.
“The interbank is the predictor in this market and it has been easing down of recent. Guys are looking to lock in these good yields,” said Johnson Nderi, an analyst at Suntra Investment Bank.
On the secondary debt market, government and corporate bonds worth 635 million shillings ($7.4 million) were traded, up from 300 million shillings on Wednesday.
In stocks, the key NSE-20 Share Index was barely
changed, down 0.1 percent to 3,188.23 points.
“We don’t expect any major impact on the equities market from the finance minister’s resignation,” Nderi said.
Shares in cement manufacturer Bamburi fell 3.7 percent to 130 shillings. Traders said investors remained nervous about the slow down in the property sector brought on by high interest rates and inflationary pressures.
By Kevin Mwanza, Reuters