NAIROBI (Reuters) - The Kenyan shilling strengthened against the dollar on Monday, helped by banks cutting back their long greenback positions following the result of a broadly peaceful election.
Uhuru Kenyatta, the son of Kenya's founding president, won the presidential election with 50.07 percent of the vote, the country's election commission said, just enough to avoid a run-off after a race that had divided the nation.
The shilling firmed as much as 0.8 percent to 85.40/50 per dollar in early trade. It was posted at 85.50/70 to the dollar at 0633 GMT, firmer than the 86.10/30 it closed at on Friday.
The local currency was volatile last week as the market awaited the outcome of a slow vote count that has been contested by the presidential runner-up, Raila Odinga.
"The shilling has gained because of the reprieve around the stand-off that we saw last week during the vote count. It's on interbank selling dollars," said Raphael Owino, assistant general Treasury manager at Commercial Bank of Africa.
The currency, which is 0.3 percent stronger against the dollar so far this year, has recovered after weakening when importers stocked up over fears of a repeat of the post-2007 election violence which had a dire effect on east Africa's largest economy and sent shockwaves through its neighbours.
The shilling was also supported by the central bank's continued stance of mopping up liquidity, making it costly to hold long dollar positions.
In the stock market, analysts expected shares to extend last week's rally that saw the main NSE-20 share index hit a 28-month high on Friday.
"After curtains fell on the elections ... we expect market activity to pick up as foreign investors and institutions return to the market," said Faith Atiti, an analyst at NIC Securities.