* Falling yields put shilling under pressure
* Safaricom's 3 percent rise push shares higher
(Recasts with close, adds shares)
By Beatrice Gachenge
NAIROBI, May 10 (Reuters) - The Kenyan shilling
tumbled to a three-month low against the dollar as falling
yields on government securities cut incentive for investors to
hold the currency, while Safaricom helped shares break
a three day losing streak.
High yields on government debt have attracted foreign
investors, helping the shilling to sustain its recovery from an
all time low of 107 per dollar hit in October, but yields have
been falling steadily and they tumbled this week.
The shilling is up 1.9 percent this year on the back of the
central bank's tight monetary policy, after policymakers
increased the bank's policy rate to 18 percent in the final
quarter of last year.
At the 1300 GMT close of markets, commercial banks posted
the shilling at 83.60/70 per dollar, down from Tuesday's close
of 83.40/50.
"The market is taking a cue from the falling rates," said a
senior trader with a leading commercial bank.
The weighted average yield on the 364-day Treasury bills
plunged to 12.431 percent in an oversubscribed sale
on Wednesday from 16.915 percent previously, amid heavy demand.
At the same auction, the yield on the 182-day Treasury bills
fell to 13.076 percent from 14.775 percent last week.
"There is a revised yield outlook. Investors are going long
on dollar on sentiments of the plunging yields. There is little
appeal (for) the shilling," said Raphael Owino a senior trader
at Commercial Bank of Africa.
Traders said if the shilling breached 83.75 against the
dollar it could drop further to 84.50.
On the Nairobi bourse, the main NSE 20-Share index
edged up 0.1 percent to 3,589.43 points, buoyed by shares of
leading mobile operator Safaricom.
Safaricom jumped 3 percent to 3.45 shillings ($0.04) after
reporting a smaller-than-expected 5.4 percent fall in 2011
pretax profit to 17.37 billion shillings.
Analysts had projected the firm's profit would dip by 10-15
percent. The firm also increased its dividend by 10 percent to
0.22 shillings per share
"People were chasing dividends," said Carol Matu, a trader
at Dyer & Blair Investment Bank.
In the debt market, bonds worth 867.4 million shillings were
traded, down from 3.1 billion shillings, with most activity
being around the 10 year bond which traded with a yield of 13.2
percent.
...........................Shilling spot rates
.....................Shilling forward rates
.......................Cross rates
..................................Local contributors
.......................Central Bank of Kenya Index
.....................Kenyan Bonds contributor pages
...............Treasury bill yields
..................Central bank open market operations
.........................Horizontal repo transactions
,................Daily interbank lending rate
.............................Kenya Bond pricing
..................Real time Africa economic data
<ECI & AFR> ...........................African economic news
.................................NSE-20 Share Index
.................................NSE All Share Index
...........................FT NSE Kenya 15 Index
.......................... FT NSE Kenya 25 Index
SPEED GUIDES:
($1 = 83.3200 Kenyan shillings)
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