Ms Rose Wangari of Warwick Florists sells a bouquet of flowers to a customer on Koinange Street in Nairobi on February 13, 2013 ahead of Valentine’s Day. Dollar inflows from flower exports helped firm the shilling. Photo/SALATON NJAU
The Kenyan shilling firmed slightly on Wednesday, helped by dollar inflows from flower exports before Valentine's Day, while shares rallied for the 11th straight session.
At 1300 GMT close, commercial banks posted the shilling at 87.20/40 to the dollar, slightly firmer than Tuesday's close of 87.30/40.
Sheikh Mehran, a senior trader at Kenya Commercial Bank, said flower exporters were receiving their payments in dollars in the run-up to Valentine's Day on Thursday.
Flower exports earned the country Sh44.51 billion ($508.69 million) in 2011.
Together with fruit and vegetables, the horticulture sector is one of the largest sources of hard currency for the east African nation, bringing in a total of Sh91.6 billion in that same year.
On the money markets, the weighted average interbank lending rate climbed to 9.4 per cent on Tuesday, from 8.8 per cent on Monday.
The rate has risen for 20 straight sessions from a low of 5.43 per cent on January 15, thanks to the Central Bank's efforts to cut pressure on the shilling from the dollar by tightening liquidity.
The shilling has been under pressure this year from importers buying dollars ahead of the General Election on March 4, and is 1.3 per cent down against the dollar in the year-to-date.
The last elections in 2007 were followed by ethnic unrest that hurt the country's economy, and investors are concerned the same might happen this time around.
At the Nairobi Securities Exchange, the main share index rose for the 11th straight session, up 0.3 per cent to 4,648.09 points.
The rally has mainly been driven by investors buying stocks, especially from banks, ahead of the release of full-year earnings, which they expect to be strong due to falling interest rates and lower inflation reading last year.
"Banks are receiving a lot of interest from investors at the moment," said Faith Atiti, an analyst at NIC Securities, adding that the rally could be slowing down as companies start releasing their results.
Co-operative Bank of Kenya rose 1.3 per cent to Sh14.05 a share, while Equity Bank, the country's biggest bank by customers, added 0.9 per cent to Sh27.75 per share.
However, Barclays shares dropped 2.1 per cent to Sh16.15 after it posted a lower-than-expected 8 per cent rise in its full-year pre-tax profit to 13.02 billion shillings.
