March 21 (Bloomberg) -- Kenya’s shilling weakened for the second day on increased demand for dollars as businesses sought to settle monthly obligations.
The currency of East Africa’s biggest economy depreciated as much as 0.5 percent and closed at 82.90 per dollar in Nairobi.
“The shilling is under pressure as businesses seek more dollars in preparation for settling their end-month,” Jeremiah Kendagor, acting head of trading at Nairobi-based Kenya Commercial Bank Ltd., said in a phone interview.
The central bank left its key lending rate at a record high of 18 percent for a third month after increasing it six times last year to keep the inflation rate under check and support the shilling. The Kenyan currency has gained 28 percent since Oct. 11 when it hit a record low of 106.75 per dollar, making it the best performer among more than 170 currencies tracked by Bloomberg.
Kenya’s inflation rate declined for a third month to 16.69 percent in February from 18.3 percent in January, the Nairobi-based Kenya National Bureau of Statistics said in an e-mailed statement Feb. 29.
The Ugandan shilling weakened to the lowest in two weeks, depreciating 0.4 percent to close at 2,485 per dollar.
“The weakness has been driven by interbank dollar purchases,” Benon Okwenje, a currency trader at Stanbic Bank Uganda Ltd., said by phone from Kampala.“Dollar inflows have been affected by the end of the main coffee season.”
The harvest in the main producing central and eastern regions is at its tail-end, according to the Uganda Coffee Development Authority.
Falling yields on government debt are also to blame for reduced dollar inflows, Okwenje said. Yields on the three-month Treasury bills retreated to 19.504 percent on Feb 22 from 19.890 percent on Feb. 8 and 23.42 percent on Jan 25.
Tanzania’s shilling fell for the first time in three days, closing 0.1 percent lower at 1,592 per dollar.
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