Kenya’s shilling fell to the lowest in almost three months against the dollar as the country said it plans to bring back a capital-gains tax and the stock market extended its losing streak to the longest in 18 months.
The government wants to re-introduce the tariff, which was suspended in the 1980s, “in order to raise more revenue,” Finance Ministry Permanent Secretary Joseph Kinyua said in a phone interview in the capital, Nairobi. “It will target the real-estate sector, which has recorded tremendous growth over the years. There are no immediate plans to levy the charge on stocks.”
The proposal was introduced in the 2013-14 budget announced last week. NIC Bank Ltd. dealer Margaret Wangeci said in an e-mailed note to clients today that the tax plan put investors “on the edge”.
The shilling depreciated 0.2 percent to 85.75 per dollar by 6:37 p.m. in Nairobi, the lowest since March 26, according to data compiled by Bloomberg. It’s gained 0.4 percent this year. The Nairobi Securities Exchange All Share Index (NSEASI) dropped for a 9th day, the longest stretch of losses since December 2011, retreating 0.7 percent to 118.78.
Kenya’s credit rating is constrained by weak government finances and rising debt levels due to a growth rate that’s significantly below potential, Moody’s Investors Services said in a report dated on June 14 and e-mailed today. This has restricted the outlook for the B1 rating, it said.
Uganda’s shilling appreciated for a second day, rising 0.2 percent to 2,595 per dollar, while the Tanzanian shilling weakened to the lowest since December 2011, falling 0.7 percent to 1,641.50.
To contact the reporter on this story: Johnstone Ole Turana in Nairobi at email@example.com
To contact the editor responsible for this story: Vernon Wessels at firstname.lastname@example.org