Kenya Shilling Heads for Biggest Gain in 5 Months: Nairobi Mover
The currency of East Africa’s biggest economy appreciated as much as 1.4 percent to 84.35 per dollar, the biggest one-day gain since Dec. 16, and was trading 1 percent stronger at 84.70 by 5:19 p.m. in Nairobi, according to data compiled by Bloomberg.
Kenya accepted 850 million shillings ($10 million) of 2.82 billion shillings of bids received for seven-day repurchase agreement at a weighted average rate of 17.72 percent, a central bank official, who declined to be named in line with policy, said by phone from the capital, Nairobi. The bank accepted all bids of 3.55 billion shilling for longer-term auction deposits, at a weighted average rate of 18 percent. The bank had offered 4 billion shillings of the securities, the official said.
“The stepped-up liquidity mopping by the central bank will keep liquidity tight in the local market, supporting the local unit,” Leon Myburgh, a foreign exchange strategist at Citigroup Inc. based in South Africa, said in a note to client.
Kenya’s central bank retained its benchmark rate at a record-high 18 percent in its monetary policy committee meeting on June 5, holding it for a sixth month.
“Tuesday’s unchanged rate decision has also certainly contributed to the strengthening of the shilling,” Myburgh said.
Kenya’s central bank introduced “longer tenor Term Auction Deposits as an additional instrument for liquidity management,” it said in in its monetary policy committee statement on June 5.
Kenya received the first $240 million of a $600 million syndicated loan agreed upon with three international lenders last month, Joseph Kinyua, permanent secretary at the Finance Ministry, said in an e-mailed statement on May 5. The remaining $360 million will be drawn down after one month, he said.
Kenya’s trade deficit widened in March as fuel imports rose to the highest in seven months, the Kenya National Bureau of Statistics said on May 30 on its website. The gap increased 22 percent from a year earlier to 80.3 billion shillings ($938 million). The inflation rate fell to the lowest for more than a year in May, slowing for a sixth month, to 12.2 percent from 13.1 percent a month earlier, the Nairobi-based Kenya National Bureau of Statistics said in an e-mailed statement on May 30.
The Ugandan shilling gained 0.3 percent to 2,477.50 per dollar today, while Tanzania’s shilling gained less than 0.1 percent to 1,588 per dollar.
To contact the reporter on this story: Johnstone Ole Turana in Nairobi at firstname.lastname@example.org
To contact the editor responsible for this story: Antony Sguazzin at email@example.com
Bloomberg reserves the right to edit or remove comments but is under no obligation to do so, or to explain individual moderation decisions.