Kenya’s shilling gained for a second day against the dollar as the U.S. currency weakened against the euro amid speculation the European Central Bank may signal its willingness to contain the spread of the region’s debt crisis.
The currency of East Africa’s biggest economy strengthened as much as 1 percent to 79.97 per dollar, and was trading 0.2 percent higher at 80.65 by 14:09 p.m. in Nairobi from a close of 80.80 yesterday.
“Global risk aversion that had seen the euro weaken has tapered off,” Rafael Owino, senior manager in the treasury at the Commercial Bank of Africa Ltd. in Nairobi, said in a phone interview today. “There is a correlation between the shilling and the dollar and hence the shilling has strengthened.”
Investors were also reassured by the Central Bank of Kenya’s comments yesterday that its purchase of dollars in the domestic foreign-exchange market “does not distort” the market, Owino said. The central bank also said that European countries facing a debt crisis “are not important to Kenya’s trade patterns or development assistance.”
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