Kenya's shilling gained slightly against the dollar on Friday as commercial banks and the central bank sold dollars, while stocks edged up.
The central bank has been in the market absorbing shillings through repurchase agreements, while selling unspecified amounts of dollars to commercial banks, with the twin aim of boosting dollar supply and draining shillings from the market.
The central bank stayed out of the repo market on Friday.
They were in the market today selling dollars again. They seem determined to keep the shilling below 100 per dollar, said a trader at one commercial bank.
At close of trade at 1300 GMT, commercial banks quoted the shilling at 99.80/100.20 against the dollar, stronger than Wednesday's close of 100.10/40. Financial markets were closed on Thursday for a public holiday.
Traders said commercial banks were squaring off their positions by selling dollars ahead of the weekend, but expected the shilling's recent gains, after a recent rally from a record low of 107 hit on October 11, to come under pressure from importers
buying dollars towards end-month.
The shilling is expected to remain under pressure as end- month demand begins to trickle in. Demand remains a threat to the shilling's recent bullish run, said Bank of Africa in a daily report.
On the Nairobi Stock Exchange, the main NSE-20 Share Index was up marginally, helped by foreign investors buying into large cap companies.
Analysts said they expected stocks to benefit from a stable shilling after the central bank intervened by tightening liquidity, but said rising yields in the fixed-income market could keep investors away.
Shares in Equity bank, the biggest bank in customer terms, extended its gains for the third straight day by 2.98 percent to 19 shillings as investors bought its shares ahead of its third quarter financial results announcement on Monday.
Investors think Equity did well in the last quarter. That's why they are buying, said Johnson Nderi, an analyst at Suntra Investment Bank.
In fixed income, corporate and government bonds worth 1.72 billion shillings were traded, up from 1.65 billion shillings on Wednesday.