Kisumu Ndogo
March 11th, 2011, 11:25 PM
Kenya shilling slides to new record low vs dollar
March 11, 2011 2:09 PM EST
The Kenyan shilling hit fresh record lows against the dollar on Friday, slipping past 85.00 to the dollar in its biggest one-day drop since May last year on interbank trading, traders said.
Central bank governor Njuguna Ndung'u said the shilling's slide was an overreaction driven by speculation that there were not enough exchange reserves to meet the country's needs, but traders said there was fundamental demand from importers. The shilling fell 1.78 percent on Friday, its biggest one-day drop against the dollar since May 19, 2010.
http://flashnewstoday.com/wp-content/uploads/2010/08/bank.jpeg
At 1300 GMT, when the market closed, commercial banks quoted the shilling at 85.70/80 to the dollar, sharply weaker than Thursday's close of 84.30/40."Friday's market activity has been dominated by heavy interbank dollar buying," said Mwambu Malamba, a senior trader at Commercial Bank of Africa.
Traders said they expected the central bank to take action next week because the market had been somewhat distorted by the interbank trade. "If the shilling weakens in a disorderly manner in CBKs (Central Bank of Kenya) view, then we expect them to act responsibly," said Malamba.
The bank maintains a policy of non-interference in the currency market unless there is substantial evidence of speculative trading on the shilling by market players. Some traders said the shilling recovered some ground in after-hours trading as banks sold on their interbank longs.
"Some longs are being flushed out slowly. After hours Friday will be a messy session. Banks can trade until the last man standing," said Chris Muiga, a senior trader at Kenya Commercial Bank. Traders said they expected the shilling to recover some ground to 84.00 against the greenback in coming days. Technical analysis shows the shilling weakening could pause at 86.00 unless the dollar gains versus regional currencies in which case the Kenyan currency could plunge as low as 90.00.
Charts put it on a long-term downtrend.
In stocks, the benchmark NSE 20 Share Index was up 13.25 points to 3,928.25 on renewed foreign investor interest following a drop in most stocks prices, analysts said. Analysts had said stocks would draw in bargain hunters, including some foreign players, at about the 4,000 point mark, spurring a gradual recovery.
"There is a lot of foreign buying because the stocks have fallen to attractive levels," said Cynthia Omondi, an analyst at Africa Alliance Securities. "They have just realized it is time to take advantage of the low prices, the factors that made them pull out still being there." Bamburi dropped a further 2.7 percent to 180.00 shillings per share even after one of its biggest shareholders, National Social Security Fund (NSSF), clarified it was not seeking to divest its stake in the cement manufacturer.
"The impact of (the) statement of the managing trustees at NSSF did not satisfy investors concerns over Bamburi's competitor performing better than them. Investors still have doubts," said Omondi. In the bond market, corporate and government bonds worth 1.014 billion shillings were traded during the session, slightly down from 1.294 billion on Thursday.
Read more: http://www.ibtimes.com/articles/121870/20110311/kenya-shilling-slides-to-new-record-low-vs-dollar.htm#ixzz1GKeo2xuh
Good news for the diaspora at least in the short term. But my feeling is that it may slide further before it recovers some ground.
March 11, 2011 2:09 PM EST
The Kenyan shilling hit fresh record lows against the dollar on Friday, slipping past 85.00 to the dollar in its biggest one-day drop since May last year on interbank trading, traders said.
Central bank governor Njuguna Ndung'u said the shilling's slide was an overreaction driven by speculation that there were not enough exchange reserves to meet the country's needs, but traders said there was fundamental demand from importers. The shilling fell 1.78 percent on Friday, its biggest one-day drop against the dollar since May 19, 2010.
http://flashnewstoday.com/wp-content/uploads/2010/08/bank.jpeg
At 1300 GMT, when the market closed, commercial banks quoted the shilling at 85.70/80 to the dollar, sharply weaker than Thursday's close of 84.30/40."Friday's market activity has been dominated by heavy interbank dollar buying," said Mwambu Malamba, a senior trader at Commercial Bank of Africa.
Traders said they expected the central bank to take action next week because the market had been somewhat distorted by the interbank trade. "If the shilling weakens in a disorderly manner in CBKs (Central Bank of Kenya) view, then we expect them to act responsibly," said Malamba.
The bank maintains a policy of non-interference in the currency market unless there is substantial evidence of speculative trading on the shilling by market players. Some traders said the shilling recovered some ground in after-hours trading as banks sold on their interbank longs.
"Some longs are being flushed out slowly. After hours Friday will be a messy session. Banks can trade until the last man standing," said Chris Muiga, a senior trader at Kenya Commercial Bank. Traders said they expected the shilling to recover some ground to 84.00 against the greenback in coming days. Technical analysis shows the shilling weakening could pause at 86.00 unless the dollar gains versus regional currencies in which case the Kenyan currency could plunge as low as 90.00.
Charts put it on a long-term downtrend.
In stocks, the benchmark NSE 20 Share Index was up 13.25 points to 3,928.25 on renewed foreign investor interest following a drop in most stocks prices, analysts said. Analysts had said stocks would draw in bargain hunters, including some foreign players, at about the 4,000 point mark, spurring a gradual recovery.
"There is a lot of foreign buying because the stocks have fallen to attractive levels," said Cynthia Omondi, an analyst at Africa Alliance Securities. "They have just realized it is time to take advantage of the low prices, the factors that made them pull out still being there." Bamburi dropped a further 2.7 percent to 180.00 shillings per share even after one of its biggest shareholders, National Social Security Fund (NSSF), clarified it was not seeking to divest its stake in the cement manufacturer.
"The impact of (the) statement of the managing trustees at NSSF did not satisfy investors concerns over Bamburi's competitor performing better than them. Investors still have doubts," said Omondi. In the bond market, corporate and government bonds worth 1.014 billion shillings were traded during the session, slightly down from 1.294 billion on Thursday.
Read more: http://www.ibtimes.com/articles/121870/20110311/kenya-shilling-slides-to-new-record-low-vs-dollar.htm#ixzz1GKeo2xuh
Good news for the diaspora at least in the short term. But my feeling is that it may slide further before it recovers some ground.