Kenya’s shilling weakened, trimming gains in the world’s best-performing currency this week, as importers boosted purchases of the U.S. currency and the withholding of bailout to contain Europe’s debt crisis damped demand for riskier assets.
The currency of East Africa’s biggest economy weakened as much as 0.3 percent to trade at 97.09 against the dollar and was trading 0.1 percent lower at 96.90 at 11:03 a.m. in Nairobi from yesterday’s close of 96.85.
The shilling has gained 2.9 percent this week, the biggest gain among more than 170 currencies tracked by Bloomberg worldwide, after the central bank raised its benchmark interest rate to 16.5 percent from 11 percent. Stocks and currencies in developing nations fell today as European leaders cut off Greek aid payments before a referendum on a bailout deal.
“There is significant increased demand for dollars following the recent strengthening of the shilling,” Raphael Agung, assistant general manager of Treasury at Nairobi-based Commercial Bank of Africa Ltd., said by phone today. “With minimal inflows there is pressure bearing on shilling hence its weakening status.”
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