Kenyan shilling flat vs dollar, bank stocks up

NAIROBI | Tue Oct 5, 2010 1:33pm BST

NAIROBI Oct 5 (Reuters) - The Kenyan shilling KES= traded flat against the dollar on Tuesday as bank stocks climbed in the wake of better than expected growth figures.

At 1140 GMT, leading commercial banks posted the shilling at 80.75/85 versus the greenback, barely changed from Monday's close of 80.80/90.

Some market players said expectations the central bank would continue purchasing dollars were preventing the shilling from breaking out of its tight range of 80.50 - 81.20.

"The market is looking to a stronger shilling but holding us up is the fear of further interventions from the central bank," Solomon Alubala, head of trading at Co-operative Bank, said.

"The (central) bank has been on one side, buying dollars and has given the impression the government is advocating a weaker shilling," he said.

The central bank says its dollar purchases are not to manipulate the currency's strength but to build up foreign reserves.

Moses Kiboi, head of trading at Citi, said market indicators pointed to an appreciating shilling in the final quarter of the year, highlighting the typical end-year dollar inflows from tourism and remittances.

On the Nairobi Stock Exchange, analysts said banks continued to post strong performances after the release of better than expected macro-economic figures including an unexpected swing into surplus for the current account.

Kenya Commercial Bank (KCB.NR) traded up 2.35 percent at 22.00 shillings while Co-operative Bank (COOP.NR) edged up 0.26 percent to 19 shillings per share, leaving it 127 percent up for the year-to-date.

"As the economy picks up steam, investors are seeing the banks as the best risk-adjusted proxy. If I want to bet on GDP, I'll look at banks. If GDP accelerates then banks' earnings will be correlated," said independent analyst Aly Khan Satchu. KES= KES1=...................... Shilling spot rates KESF= <0#KESF=>.................Shilling forward rates EURKES= KESX= KESX1=...................Cross rates KES=KE..............................Local contributors CBKINDEX...................Central Bank of Kenya Index .................Kenyan Bonds contributor pages CBK03 CBK06 KE3MTB=...........Treasury bill yields CBK04..............Central bank open market operations CBK07.....................Horizontal repo transactions KEIBR=,CBK02............Daily interbank lending rate <0#KETSYSTR=>.........................Kenya Bond pricing ECONAFRICA..............Real time Africa economic data ECI & AFR .......................African economic news SPEED GUIDES: REUTERS MONEY (Reporting by Richard Lough; Editing by Ron Askew)

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