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Kenyan Shilling Strengthens Against Dollar on Bank Action

Aug. 21 (Bloomberg) -- Kenya’s shilling strengthened against the dollar as the central bank removed money from the market through repurchase agreements.

The currency of East Africa’s largest economy appreciated as much as 0.4 percent to 83.70 per dollar, the highest on a closing basis since Aug. 13, as of 2:15 p.m. in Nairobi, the capital.

The shilling is expected to strengthen on greater dollar inflows from the agricultural sector and frequent central bank intervention to tighten liquidity, Nairobi-based NIC Bank Ltd. said in an e-mailed note today.

“For the day we expect the shilling to trade with a stronger tone against the dollar and within a range of 83.80 and 84.50,” the bank said.

The Central Bank of Kenya sold 1.5 billion shillings ($17.9 million) of seven-day repurchase agreements at a weighted average yield of 9.208 percent, a central bank official, who asked not to be identified in line with policy, said.

The bank also accepted 5.3 billion shillings for term auction deposits, the official said today by telephone from Nairobi. The 14-day term auction deposit attracted a yield of 9.981 percent, the 21-day issue came in at 9.978 percent and the 28-day note carried a rate of 10.182 percent, he said.

The Tanzanian shilling gained 0.7 percent to 1,569.65 a dollar, the most since Dec. 28 on a closing basis, while Uganda’s shilling strengthened 0.2 percent to 2,488.70 versus the U.S. currency.

To contact the reporter on this story: Eric Ombok in Nairobi at eombok@bloomberg.net.

To contact the editor responsible for this story: Shaji Mathew at shajimathew@bloomberg.net

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