Page last updated at 14:08 GMT, Wednesday, 2 January 2008

Kenya violence unsettles markets

Kenyan"s buy vegetables at a market in the Kibera slum in Nairobi
There are fears that Kenya's economy may be derailed by the violence

Violent protests against the outcome of Kenya's presidential election have caused a sell-off in the country's currency and sent key stocks falling.

The Kenyan shilling dropped 7% against the US dollar after the opening of the foreign exchange market was delayed.

Kenya's stock exchange also opened late, while the world's biggest tea auction, held weekly in the port city of Mombasa, has been postponed.

President Mwai Kibaki has been accused of vote-rigging to win the election.

Violence has broken out across Kenya with at least 250 people killed as Mr Kibaki's supporters have clashed with those of opposition leader Raila Odinga.

With no clear cut election result, there is a lot of uncertainty and the market is looking shaky
ACI chairman Bryan Muigai

Kenya is in East Africa's largest economy. It relies largely on tourism and agriculture for growth, but it is also a regional centre for manufacturing and financial services.

Bad for business

Kenya's currency fell to 68 shillings against the US dollar from 63.50 on 24 December, the last day of trading before the new year.

ACI Kenya, the body representing local money market makers, said it had discussed delaying currency trading with the country's central bank.

It wanted to give commercial banks time to talk with clients and assess their currency requirements, and possible demand levels for the US dollar.

"With no clear cut election result, there is a lot of uncertainty and the market is looking shaky," said ACI chairman Bryan Muigai.

Many investors will be looking to buy dollars as they are seen as a safer investment and asset than the Kenyan shilling in times of turmoil.

The country's benchmark index NSE-20 share index fell 5.1% to 5,167.18.

Stock traders also sold shares in major Kenyan firms, with Barclays Bank of Kenya shedding 5% to 75 shillings, and Kenya Commercial Bank declining 6% to 26 shillings, according to a Nairobi Stock Exchange official.

Business leaders have warned that the government will lose about 2bn shillings ($31m) a day in tax revenues for every day companies have to stay closed due to the strife.

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