Kenya Shilling Sinks to Year-Low on Pre-Election Dollar Hoarding
Kenya’s shilling sank to the lowest level in a year as companies resumed purchases of dollars on concern of increased political risk before elections in March.
The currency of East Africa’s biggest economy fell as much as 0.4 percent to 87.73 a dollar and traded at 87.50 a dollar as of 3:35 p.m., the lowest on a closing basis since Jan. 4. It gained less than 0.1 percent yesterday, the first advance since Jan. 15, as the central bank sold dollars. The shilling has dropped 1.6 percent this year, compared with a 6.3 percent fall in South Africa’s rand, the continent’s worst performer.
The vote will be the first since a disputed 2007 poll sparked two months of violence in which more than 1,100 people died. The Central Bank of Kenya sold an unspecified amount of dollars today after taking the same measures yesterday, Duncan Kinuthia, the head of trading at Commercial Bank of Africa Ltd., said by phone from Nairobi. An official in the institution’s foreign-exchange department, who declined to be identified in line with policy, confirmed the dollar sales when contacted by phone today.
“There has been demand particularly from the manufacturing sector, forcing importers to buy them at lower levels and piling further pressure on the shilling,” Nairobi-based NIC Bank Ltd. (NICB), said in a note today. “The local unit has not recovered despite central bank’s attempt to lift it up by pumping dollars over four previous sessions.”
The Ugandan shilling weakened less than 0.1 percent to 2,677.50 a dollar, while Tanzania’s shilling depreciated less than 0.1 percent to 1,608 per dollar.
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