Kenyan shilling falls, stock market slide persists

By Kevin Mwanza

NAIROBI (Reuters) - The Kenyan shilling fell to an 11-week low on Friday as expected support from the central bank failed to materialise and a week-long share sell-off persisted.

The shilling has weakened 0.8 percent since June 6 as foreign investors have booed gains from 2013's 20 percent rally in stocks.

It could come under further pressure after the finance minister said on Thursday that Kenya plans to reintroduce a tax on capital gains, which could deter foreign investors.

At 1300 GMT commercial banks quoted the shilling at 85.50/60 per dollar, a level last touched on March 28, against Thursday's close of 85.35/55.

"The shilling is definitely going to weaken. The thing is how far they (central bank) will let it go," Co-operative Bank trader Pally Muchiri said.

The bank intervened for the first time in four months on May 29, selling unspecified amount of dollars after the shilling fell 1.7 percent in five sessions to an eight-week low of 85.30/50.

"Any panicky moves from importers would see the shilling slip further. I see 86 being hit next week, though central bank actions would slow such a move," said a trader at one commercial bank.

In stocks, the main NSE-20 share index fell for the sixth straight session, down 0.7 percent to 4,806.52 points. The index has lost 3.7 percent since June 6.

"The sell-off is part of a global phenomenon. The local concern is the capital gains tax, but the 1.5 percent transport tax could also have a detrimental effect on businesses," Suntra Investment Bank analyst Johnson Nderi said.

Hares in Kenya Airways, one of Africa's leading airlines, tumbled 5.6 percent to close at 10.10 shillings after it posted worse than expected full-year pretax loss because of falling passenger numbers.

Profit-taking investors sent Mobile phone services company Safaricom down 4.1 percent to close at 7 shillings per share. The stock has more than doubled in price over the past 12 months.

In the debt market, bonds worth 3.5 billion shillings were traded, up from 3 billion shillings on Thursday.

Source: http://news.yahoo.com/kenyan-shilling-falls-stock-market-slide-persists-151042879.html

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