Kenya Shilling Drops Second Day on Europe; Uganda Shilling Falls

Kenya’s shilling weakened for the second day after elections in France and Greece spurred concern Europe will struggle to resolve its debt crisis, curbing investor appetite for riskier assets.

The currency of East Africa’s biggest economy depreciated by 0.2 percent 83.30 and was trading 0.1 percent lower at 83.25 to the dollar by 1:03 p.m., the highest since May 2 in Nairobi.

Emerging-market stocks fell the most in a month and the euro plunged to a three-month low against the dollar as Frances president-elect, socialist Francois Hollande, pledged less austerity and Greek voters picked anti-bailout parties.

“The shilling is on a weak note on account of the on-going potential re-alignment in the euro zone as Hollande has rejected austerity as the measure for economic growth and is calling for government support,” Raphael Agung, a currency trader at Nairobi-based Commercial Bank of Africa Ltd., said in a phone interview.

Kenya accepted 5 billion shillings ($60 million) of bids for seven-day repurchase agreements at a weighted average rate of 17.363 percent, after receiving offers totalling 6.1 billion shillings. The bank had offered 5 billion shillings of the securities, an official in the bank’s money market department who asked not to be identified citing policy, said in a phone interview today from Nairobi, the capital.

The Ugandan shilling weakened for the second day, the most in almost four weeks, depreciated 0.9 percent lower to 2,483. A close at this level will be the biggest decline since April 11.

Tanzania’s shilling gained for the third day, appreciating 0.1 percent to 1,582 against the dollar. A close at this level will be the strongest since Jan. 13, according to data compiled by Bloomberg.

To contact the reporter on this story: Johnstone Ole Turana in Nairobi at jturana@bloomberg.net

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net

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