Kenya’s shilling headed for its lowest level in a year as an increase in demand for dollars from companies coincided with a fall in inflows from key export sectors.
The currency of East Africa’s biggest economy weakened less than 0.1 percent to 87.45 a dollar by 12:31 p.m. in Nairobi, its lowest level on a closing basis since Jan. 4, 2012. The shilling has depreciated 1.6 percent this year, compared with a 1.8 percent drop in Tanzania’s shilling and a 6.3 percent loss for South Africa’s rand, the continent’s worst performer.
“Kenya’s shilling weakened due to heavy demand for dollars from importers amid reduced inflows from agriculture, tourism and diaspora remittances,” Nairobi-based NIC Bank Ltd. (NICB) said in a note today.
The shilling will probably weaken further over the next five weeks as businesses accumulate dollars on concern March 4 elections may spark violence, according to a Bloomberg News survey of traders and analysts. The vote will be the first since a disputed 2007 poll sparked two months of clashes in which more than 1,100 people died.
The Kenyan shilling may weaken 1.7 percent to 89 a dollar, the survey of eight analysts and traders on Jan. 23 showed. The median forecast was 88 a dollar by voting day.
The currency lost 9.9 percent between the vote on Dec. 27, 2007, and Feb. 27, 2008, the day before an accord to end the violence was signed, according to data compiled by Bloomberg
The central bank has sold dollars each day since Jan. 18, to support the shilling, according to data compiled by Bloomberg.
Tanzania’s shilling depreciated 0.2 percent to 1,613 per dollar, retreating for a second day. The Ugandan shilling was unchanged at 2,675 a dollar.
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