TA:Kenyan shilling weakens vs dollar, stocks edge up
NAIROBI (Reuters) - The Kenyan shilling fell against the dollar on Monday, weighed down by dollar demand from energy sector importers and the interbank market and by global risk aversion due to mounting concerns over the euro zone. Central Bank of Kenya (CBK), which has scheduled its second monetary policy meeting in four weeks for Wednesday, said last week it planned to trade foreign currency directly with key economic sectors, a move that helped lift the shilling off a record low of 104.15. CBK Governor Njuguna Ndung'u, however, assured markets the bank was committed to a floating exchange rate and stressed he was not contemplating capital controls. At 0726 GMT, leading commercial banks quoted the shilling at 100.60/80 against the dollar, weaker than Friday's close of 100.20/40. "We have seen some interbank plays. It still looks fuzzy for the shilling and it may maintain a bearish trend for now," said Duncan Kinuthia, head of trading at Commercial Bank of Africa. "The shilling is moving on global fears. But it might get some respite from the MPC decision." Traders said they were watching out for further supportive measures from a government high level committee set up to address the fall in the shilling with a view to announcing new, comprehensive measures this week. They said escalating concerns about the euro zone's debt crisis was however likely to weigh on the shilling. "With the dollar gaining ground internationally as a safe haven currency we cannot rule out further shilling weakness as it tracks other emerging economies against the dollar," said Bank of Africa in a daily report to its clients. In stocks, most shares started the session with slight gains following a 10-day drop that took the benchmark NSE-20 Share Index as low as 3,284.06 points on Friday, its lowest since January 7, 2010. Renaldo D'souza, an analyst at Genghis Capital, said stocks had fallen 6 percent last week -- the biggest weekly fall this year -- to attractive prices and local institutional investors were buying across most counters.
