NAIROBI (Reuters) - The Kenyan shilling weakened slightly on Wednesday as offshore investors bought dollars with the proceeds of profits from a stock market rally, traders said.
At the 1300 GMT market close, leading commercial banks posted the shilling at 85.10/20 compared with the previous day's close of 85.00/10.
"Equity investors have been buying dollars as they take profit from the rally," said Ignatius Chicha, head of markets at Citibank Kenya. "If more of them sell their shares, we will see continued demand for dollars."
Kenya's benchmark NSE-20 share index is up 20 percent so far this year, boosted by the largely peaceful outcome to March's presidential vote, in contrast to the previous election in 2007 which was followed by violence.
The index closed 0.02 percent lower on Wednesday at 4,984.33 points. Equity Bank, the country's largest bank by customers, dropped 1.4 percent to 35.25 shillings.
Some traders said any surge in demand for dollars on the profit-taking could be offset by attractive rates at the short end of the government debt curve.
A trend of falling yields on domestic debt is attracting foreign investors as a short-term trading play, while they face getting only minimal returns on investments in development market bonds.
At a primary Treasury bills sale, the weighted average yields on 182- and 364-day bills fell in oversubscribed sales.