Posted  Monday, March 11  2013 at  19:47

The markets on Monday reacted positively to a peaceful election and the Independent Electoral and Boundaries Commission’s declaration of Uhuru Kenyatta’s presidential win.

The shilling opened on a strong note against the US dollar in trading as most Nairobi Securities Exchange (NSE) counters inched up.

Dealers at ABC Bank said the shilling strengthened to Sh85.30, but demand saw it shed some ground and close at the Sh85.50/70 level.

“It strengthened after peaceful polls,” said Julius Kirinya from ABC Bank treasury department. The local currency opened at 85.40 units to the dollar, according to dealers at CBA, which was a shilling higher that the closing rate of 86.25/45 on Friday.

Dealers at CBA said that the shilling’s reaction to the political outcome was positive as shown by the significant gains made in the morning trade.
They said that the shilling had taken the political events in its stride, keeping a positive run that saw the unit hit a three-month high against the US currency last week.

(Read: Shilling rises to three-month high on peaceful polls)

A senior dealer at CBA, Mr Joshua Anene, said that the two main risk factors facing the shilling this week will be the CBK Monetary Policy Committee meeting Tuesday and the legal contest over the results of the presidential election.

“The Policy Committee meeting on Tuesday is the key market risk this week. To add to that, we expect the political risk to the shilling to remain elevated until the dispute over the election is resolved,” said Mr Anene.

(Read: CBK expected to hold policy rate with eye on election)

The Central Bank of Kenya (CBK) has also helped the shilling remain strong through mopping up of excess liquidity from the market in recent weeks.

The CBK’s open market repo transactions resulted in a net liquidity withdrawal of Sh6.8 billion last week, although the average interbank rate decreased to 9.72 per cent during the week ending March 8 from 10.09 per cent recorded in the previous week.

The stock market also reflected confidence after a peaceful poll. “Optimism is high as normalcy returns after the peaceful conclusion to the General Election. Activity is relatively up. Turnover is at Sh326.2 million,” said a mid-day report by NIC Capital.

The NSE-20 Share Index increased by 137.7 points to close at 4796.33 points up from Friday’s 4658.83 points, while market capitalisation stood at Sh1.565 trillion from Sh1.516 trillion. This represented an increase in investor wealth by Sh48.6 billion.

ARM touched a record Sh68.5 high, NIC Bank Sh53.50, KCB Sh40, Jubilee Insurance Sh227 while Britam crossed the Sh9 initial public offer price to touch a Sh9.20 high.