NAIROBI, July 30 (Reuters) - Kenyan stocks surged for he second straight session on Friday, buoyed by optimism a new constitution will be adopted next week, while the shilling slipped after the central bank bought dollars from the market.
The benchmark NSE-20 share index closed at a near two year high of 4,438.58 points, having added 40.26 points on the day, to extend a year-long rally that has pushed it into the top performer spot in Africa.
'The bourse has put in a 100 point, two-session acceleration as buyers cheer the MPC's rate move and anticipate a favourable outcome to the referendum next week,' said Aly Khan Satchu, an independent analyst, referring to Wednesday's 75 bps rate cut.
'The move higher has been broad based and on good volume as buyers turned a whole lot more pushy,' he said.
The shilling finished the session at 80.30/50, down from the previous close of 80.15.25, after the central bank bought dollars from the market. One trader said the bank may have bought as much as $16 million over two days.
Traders said the shilling was likely to appreciate next week on the back of positive sentiment ahead of the referendum on a new constitution, slated for Wednesday.
Several polls have shown the draft is likely to be adopted by voters, with the latest one showing 66 percent of voters were likely to say yes to the draft, which is viewed as important for stability in east Africa's largest economy.
'We expect it to strengthen next week ahead of the referendum,' said Samir Lagardia, trader at Diamond Trust Bank, adding the market will be watching whether voting will be sullied by any incidences of violence.
'If the draft passes and there are instances of violence, the shilling will still weaken. However if it passes without incident, the first stop will be 79.00.'
Other traders had attributed the shilling's weakness to moves by other international currencies.
'It has weakened basically because of the euro losses on the international markets. I think we might have a quiet day but if euro movements are large we might see the shilling track it,' said Kennedy Butiko, deputy head of treasury at Bank of Africa Kenya.
The shilling, like some other frontier market currencies, has been buoyed in recent days by the euro's strength on the view that there will be a return of investor appetite for riskier assets, analysts said.
Traders said bond prices were stable, with a little heightened selling in the long end of the curve.
(Reporting by Richard Lough and Duncan Miriri; editing by Ron Askew)Keywords: KENYA CURRENCY/
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