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Kenya shilling down as dollar firms across board

NAIROBI, Nov 12 (Reuters) - The Kenyan shilling gave up some ground against the dollar on Friday as the greenback strengthened against major currencies. At 0750 GMT, commercial banks in Kenya quoted the shilling at 80.60/70 from Thursday's 80.45/55 closing level. The shilling typically strengthens towards the tail end of the year due to higher tourism receipts and increased flow of remittances by Kenyans working abroad. It hit a three-month high at the end of last week. The Central Bank of Kenya said it was in negotiations with the International Monetary Fund (IMF) for a $497 million loan to shore up its foreign exchange reserves. Traders said there had been no immediate impact on the shilling. Kenya Commercial Bank's Chris Muiga said the IMF loan, if agreed on, would be a boost for the shilling but he predicted it would remain on the back foot as long as the central bank continued to buy foreign exchange from the market. The irony is that we are ignoring our own fundamentals," said Muiga. "The fly in the ointment is central bank," he said, referring to intermittent central bank purchases of foreign exchange. "They come out of the market and the market can chart its own course." The central bank, which stayed out of the market on Friday, says its purchases are not an intervention to keep the shilling weak but are intended to replenish its reserves, which have for months remained below the statutory requirement. The central bank purchased 5.0 million euros on Wednesday . "In the absence of major market moving news, we expect the home unit to continue hovering around the now familiar levels of 80.00 - 81.00 ahead of the weekend," Commercial Bank of Africa said in a market report. At the stock market, share prices looked set to gain with increased demand for blue chip stocks such as East African Breweries and Bamburi Cement. Prices for the two were up 1.88 and 1.0 percent respectively. "Most counters are pointing up in the morning session, it's bullish," said Wycliffe Masinde, an analyst at Kestrel Capital. "There is a lot of foreign activity on blue chip counters such as EABL and Bamburi." But Nairobi's benchmark NSE20 index has been weakening in recent days, and Masinde said valuations were generally perceived as expensive. At 0835 GMT, seven stocks were up, another five were down and the rest unchanged. The index hit a three-week low of 4,587.49 points on Thursday. ...........................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 ...........................African economic news SPEED GUIDES: (Reporting by Helen Nyambura-Mwaura; Editing by Richard Lough and Sujata Rao) (For more Reuters Africa coverage and to have your say on the top issues, visit: http://af.reuters.com) Keywords: KENYA MARKETS/ (Email: nairobi.newsroom@reuters.com; tel: +254202224717) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved.

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