The Kenyan shilling eased on Friday, while stocks fell to a 29-month low as both markets closed early due to US President Barack Obama’s visit.
At close of trade at 1000 GMT, commercial banks quoted the shilling at 101.1525 to the dollar versus Thursday’s close of 100.7585 as banks covered their short dollar positions.
“It’s a thin market, so people wanted to square off their positions because the forex market is closing at 1pm. It’s just short covering (of dollar positions),” a senior trader at one commercial bank said.
Major roads in the capital Nairobi will be closed to the public for several hours in the afternoon before Obama’s arrival to attend a global entrepreneurship summit.
The shilling has benefited this week from a liquidity squeeze in the money markets that forced banks to cut their hard currency holdings to meet their local currency funding needs.
The weighted average interest rate on the overnight borrowing market for banks soared to 16.3769 per cent on Thursday from 15.4220 per cent the previous day.
On the Nairobi Securities Exchange, the main NSE-20 Share Index was down 39.04 points to close at 4,500.43 points, falling for the 13th straight session. The index was near this level in February 25, 2013, when it closed at 4,463.65 points.
Daniel Kuyoh, research analyst at Kingdom Securities, said the fall was a continuation of a local retail investor sell-off that started earlier this week, taking cue from foreign investors who are exiting to limit their foreign exchange losses.
“It’s still the same dynamics. Majority of the trades are being driven by retail investors, mainly on the bluechip counters (shares),” Kuyoh said.
On the secondary market, government bonds worth Sh9.51 million ($94,019) were traded, compared with Sh25.1 million on Thursday.