Kenyan shilling flat, stocks down for third day

President Kenyatta

The Kenyan shilling was little changed on Wednesday, while stocks closed lower, spooked by investors pulling back due to profit taking and worsening security in the country.
On the Nairobi Securities Exchange, the main NSE-20 Share Index was down 17.99 points, or 0.37 percent, to close at 4,902.62 points.
It was the index's third consecutive decline, hurt by gun and grenade attacks in the capital and port city of Mombasa and travel warnings that led to the evacuation of tourists from some coastal hotels.
"We can attribute it to a bit of profit-taking and then also we are seeing a lot of liquidation by foreign investors," said Daniel Kuyoh, research analyst at Kingdom Securities.
"One of the things that is really impacting us is the security risks that the country is currently (experiencing)."
On the secondary market, government bonds valued at 886.9 million shillings were traded, compared with 2.35 billion shillings traded a day earlier.
At close of trade at 1300 GMT, commercial banks quoted the shilling at 87.80/90, compared with Tuesday's close of 87.75/85.
Traders said they expected the shilling to trade in the 87.70 to 88.50 range in coming days.
The shilling has retreated 0.8 percent in May. On Tuesday, it touched 87.95, nearing a two-and-a-half year low according to Thomson Reuters data.
The Central Bank of Kenya has persistently mopped up liquidity this year amid lower-than-expected dollar inflows which local exporters typically then convert into shillings.
By draining excess liquidity, the bank makes it more expensive for banks to hold onto long dollar positions.
On Wednesday, the bank mopped up 10 billion shillings from the money market, while on Tuesday it mopped up 10.8 billion shillings.
Technical analysis of the shilling's 14-day and 50-day weighted moving averages show that the shilling is expected to maintain a weakening trend in the near term.