NAIROBI, May 20 (Reuters) - The Kenya shilling <KES=> firmed slightly against the dollar on Tuesday, recouping losses earlier due to increased demand for the U.S. currency from the telecommunications sector, dealers said.
At 1040 GMT commercial banks quoted the local unit at 62.25/35 to the dollar, compared with Monday's close of 62.35/45.
Earlier in the day the unit had traded at 62.50/60 due to corporate demand for the U.S. currency.
"There's (dollar) demand, there's some buying ... some telecoms players (in the market)," said Chris Muiga, a senior dealer at Kenya Commercial Bank.
Dealers said the local unit had a mixed outlook in coming days on inflows from the initial public offering (IPO) of mobile phone firm Safaricom [SCOM.NR] and importers buying dollars.
Local investors have been allotted 65 percent of the 10 billion shares, worth at least 50 billion shillings.
The government is offloading a 25 percent stake in Safaricom.
"With the end of month approaching ... we could see some volatility as inflows targeting the Safaricom IPO start streaming in while importers also buy to meet their end of month requirements," Bank of Africa said in a market report.
"Grain importation could put more pressure on the local unit," it said.
Agriculture Minister William Ruto told Reuters on Tuesday that Kenya plans to import three million bags of maize to stave off a looming food shortage caused by post-election ethnic clashes that uprooted thousands of farmers from their farms.
The government is allowed to cut back on the foreign allotment of Safaricom shares by up to 15 percent out of the 35 percent allocation should local investors oversubscribe by more than 200 percent.
Preliminary figures released by the government earlier in the month showed that local buyers had oversubscribed by close to 254 percent.
Central Bank Governor Njuguna Ndung'u told Reuters on Tuesday that the bank would negotiate a forward contract for proceeds from foreign investors once final allocations are made.
However, he said the money should have minimal impact on the shilling.
The government estimates foreigners will bring between 11 billion and 19.25 billion shillings.
"We will negotiate a forward contract after the (Safaricom) allocations are confirmed," Ndung'u said. "It is government money. It will go straight to the exchequer account."
Dealers said they expected the move to have minimal effect on the market, unless the bank sold some of the proceeds.
<KES=> <KES1=>............Shilling spot rates
<KES=> <KES1=>............Shilling spot rates
<KESF=>...............Shilling forward rates
<EURKES=> <KESX=>.Cross rates
<KE/CONT1=>............All Kenya Contributors
<CBKINDEX>........Central Bank of Kenya Index
<KE/DEBT>......Kenyan Bonds contributor pages
<CBK03> <CBK06> <KE3MTB=>.Treasury bill yields
<KEIBR=>,<CBK02>..Daily interbank lending rate
<0#KETSY=>...Kenya Bond pricing
SPEED GUIDES:
<REUTERS> <KES/1> <KE/DEBT> <MONEY>
(Additional reporting by Duncan Miriri) (Reporting by George Obulutsa; Editing by Ron Askew)
