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Kenyan shilling weakens on dollar demand, Egypt turmoil

The Kenyan shilling extended its losses on Tuesday due to rising demand for dollars among importers, while tea export earnings were hurt by the turmoil in Egypt, a major buyer of Kenya's tea.
The Kenyan shilling extended its losses on Tuesday due to rising demand for dollars among importers, while tea export earnings were hurt by the turmoil in Egypt, a major buyer of Kenya's tea. 

The Kenyan shilling extended its losses on Tuesday due to rising demand for dollars among importers, while tea export earnings were hurt by the turmoil in Egypt, a major buyer of Kenya's tea.

The shilling was posted at 87.50/70 per dollar at the 1300 GMT market close, weaker than Monday's close of 87.40/60.

"I can bet on a weaker shilling for now, because as we approach end-month we should see a number of buy tickets (for dollars)," said Robert Gatobu, a trader at Bank of Africa.

Importers routinely buy dollars towards the end of the month as they pay for shipments of goods into the country.

"The supply side is limited... The Egypt unrest is one of the reasons why," Gatobu said.

Tea exports are the east African country's top foreign exchange earner. Kenya is the biggest exporter of black tea in the world, and a good portion of that is sold to Egypt.

The shilling wobbled after the ouster of former Egyptian president Mohamed Mursi on July 3, as it did when strongman Hosni Mubarak was deposed in February 2011.

In stocks, the main NSE-20 share index fell for the first time in four sessions, down 0.2 per cent to 4,840.69 points, led lower by East African Breweries (EABL), the second-most capitalised stock on the Nairobi bourse.

The brewer fell 2.2 per cent to 314 shillings per share. Its stock has fallen 10 per cent since July 30, when it warned that its full-year net profit would drop by more than a quarter.

"If the profits fall more than 30 per cent the share price could go further down," said Faith Atiti, an analyst at NIC Securities.

On the secondary bond market, securities worth a total of Sh124 million ($1.4 million) were traded, compared with Sh456 million a day before.

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