Breaking News

Lloyds Reaches $370 Million Settlement With Regulators Over Libor
Tweet TWEET

Kenya Shilling Snaps Gain as Businesses Buy Dollars to Pay Bills

Kenya’s shilling reversed a two-day gain to depreciate the most in a week as businesses bought dollars to pay their end-of-the-month debts.

The currency of East Africa’s biggest economy weakened as much as 0.2 percent to 87.35 per dollar and traded at 87.30 by 12:33 p.m. in Nairobi, the most on a closing basis since Feb. 18, according to data compiled by Bloomberg.

Kenya will hold its presidential vote on March 4, the first since a disputed 2007 ballot sparked two months of violence in which more than 1,100 people died. The currency may decline to 89 a dollar by election day, according to a Bloomberg survey of analysts and traders last month.

“The weakening of the shilling is due to dollar demand by businesses for their end-month obligations,” John Muli, a dealer at Nairobi-based African Banking Corp., said in a phone interview. “With the elections coming up, we expect subdued trading”

The Central Bank of Kenya offered 10 billion shillings ($114 million) of bids for nine-day repurchase agreements and term-auction deposits today, according to a central bank official who asked not to be identified in line with policy. It sold nine-day repos rather than the usual seven-day securities because of the election date, the official said. The bank uses the repos and TADs to reduce money supply and support the shilling.

The shilling will trade in a range between 87.05 per dollar to 87.45 per dollar, Nairobi-based NIC Bank Ltd. (NICB) said in a note today.

Uganda’s currency traded unchanged at 2,645 per dollar, while the Tanzanian shilling gained for a second day, appreciating 0.2 percent to 1,630 per dollar.

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

To contact the editor responsible for this story: Vernon Wessels at vwessels@bloomberg.net

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.