Kenyan shilling firms on tea exports, shares rise

By Kevin Mwanza

NAIROBI (Reuters) - The Kenyan shilling firmed on Tuesday helped by tea sector dollar inflows after the weekly auction, while shares rallied for the third straight session.

The shilling was posted at 85.70/90 per dollar at the 1300 GMT market close, 0.2 percent stronger than Monday's close of 85.85/86.05.

Tea is Kenya's leading foreign currency earner and is sold at the port city of Mombasa every Tuesday. Exporters typically convert their dollar earnings into shillings to pay farmers and cover operational expenses.

"Tea exporters were in the market selling dollars. That boosted the shilling," said a trader at one commercial bank.

Traders said players in the market were trading cautiously as the country awaited the verdict on an election petition challenging the outcome of this month's presidential vote.

Defeated contender Raila Odinga is challenging the victory of Uhuru Kenyatta in a largely peaceful election on March 4 that eased worries of another round of factional violence to match that which killed hundreds after a 2007 vote.

The Supreme Court is required by law to give a ruling on the petition by Saturday.

"The shilling could rise above 85.00 shillings per dollar if the Supreme Court strikes out the petition," said Peter Mutuku, head of trading at Bank of Africa.

The shilling, which is up 0.3 percent against the dollar so far this year, has been hemmed in the 85-86 range in the last two weeks, mainly due to the uncertainty around the petition.

In stocks, the benchmark NSE-20 share index rose 0.5 percent to 4,758.22 points.

"The market is still bullish and once this election petition is out of the way we may see it rally further," said Joseph King'ori, a trader at Drummond Investment Bank.

"Investors expect a smooth transition despite the hiccups."

The main index has gained 14.5 percent so far this year, adding to a 29 percent rally last year, driven by investors buying stocks on the back of strong company results.

Kenya Commercial Bank, the country's largest bank by assets, rose 2.6 percent to 40 shillings per share.

In the debt market, bonds worth 1.6 billion shilling were traded. No bonds were traded on Monday due to a system glitch. kenyak

Source: http://news.yahoo.com/kenyan-shilling-firms-tea-exports-shares-rise-150014380--business.html

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