NAIROBI (Reuters) - Kenya's shilling rallied to hit its strongest level to the U.S. dollar in 18 weeks in early trading on Tuesday after Kenyans turned out in their millions to vote peacefully in Monday's general election.
Uhuru Kenyatta who is competing against Raila Odinga opened an early lead and put him in the best position for a first round win, encouraging some investors who are nervous about a run-off if neither secures more than 50 percent of the vote this time.
Monday's presidential election was the first since a disputed vote in 2007 unleashed a wave of tribal bloodshed.
The shilling struck an intraday traded high of 85.10, a level last seen on November 1, Thomson Reuters data showed. Technical analysis showed support for the U.S. currency at 84.80, traders said.
"There are indications we might see a first round victory, which is good for political risk, and the vote went on peacefully without any major hitches," said Dickson Magecha, a senior trader at Standard Chartered Bank.
Turnout was estimated at 70 percent or more of the 14 million eligible voters, who were undeterred by pockets of violence that killed at least 15 people.
Deputy Prime Minister Kenyatta's opened a lead of 54 percent of votes counted to Prime Minister Odinga's 41 percent but that could be eroded with just 4.2 million tallied by 0700 GMT, provisional figures by the election commission showed.
Based on estimated turnout, more than 10 million or more votes need to be counted. An official result may not be declared Wednesday or later.
At 0640 GMT leading commercial banks quoted the shilling at 85.20/40, 0.8 percent stronger than Friday's close of 85.80/86.00. Kenyan markets were closed on Monday.
"As long as the (peaceful) trend continues, the shilling is headed for further positive sentiment and a further rally," said Chris Muiga, a senior trader at Kenya Commercial Bank.
The real test to Kenya's hopes of restoring its reputation as a stable democracy will be whether the final result, when declared, is accepted or disputed, and whether any challenges take place in the courts or on the streets.
The unrest in 2007/8 killed more than 1,200 people and sent the Kenyan economy, the region's biggest, into a tailspin and delivered shockwaves through neighbouring countries.
African neighbours have been watching the outcome intently.
Peter Mboowa, a trader at KCB in Kampala said there were "no clear signs for now where the Ugandan shilling will move in the course of the day but of course developments in Kenya will certainly be a big influence."
At 0650 GMT, banks quoted the Ugandan shilling at 2645/2655, a fraction stronger than Monday's close of 2,648/2,658.
Ugandan investors were also taking their cue from Tuesday's central bank lending rate policy meeting expected at 0900 GMT, market players said.