Nov. 28 (Bloomberg) -- Kenya’s shilling gained for the first time in six trading sessions, supported by dollar inflows from the sale of coffee.
The currency of East Africa’s biggest economy gained as much as 0.3 percent to 85.75 a dollar and was trading 0.1 percent stronger at 85.90 by 1:04 p.m. in Nairobi.
Kenya’s benchmark coffee grade climbed for a second successive sale to an average $323.97 a bag from $320.91 at the previous auction, the Nairobi Coffee Exchange said in an e-mailed statement yesterday. Kenya was Africa’s sixth-biggest exporter of the beans from June 2010 through May last year, according to the London-based International Coffee Organization. The exchange has been conducting fortnightly sales instead of weekly auctions since Oct. 16 because of low stockpiles.
“The shilling has received support from dollar inflows form the coffee sale,” John Muli, a dealer at Nairobi-based African Banking Corp., said by phone today. “This gain may not last for long due to month-end obligations by businesses and a pick-up in imports ahead of the festive season.”
Businesses usually import more products as they prepare for increased sales during the Christmas and year-end period. Christians account for 87 percent of the 38 million population, according to the CIA World Factbook.
The Central Bank of Kenya offered for sale 10 billion shillings ($117 million) of seven-day repurchase agreements and term-auction deposits, a central bank official who declined to be identified in line with the bank policy, said on phone.
The Ugandan shilling weakened for the eighth day, the longest losing streak in more than three years, on “panic buying” as businesses accumulate dollars on concerns that a freeze on donors’ aid may weaken it further.
The currency of East Africa’s second-largest economy weakened as much as 0.3 percent to 2,703 a dollar and was last trading less than 0.1 percent down at 2,695 a dollar, the worst set of losses since March 2009.
“The depreciation of the shilling is due to panic buying of dollars in the market on anticipation of a further weakening of the Ugandan shilling following reports of possible aid cuts to Uganda,” Faisal Bukenya head of currency trading at Barclays Bank Uganda Ltd., said by phone from Kampala.
The World Bank said on Nov. 14 it was reviewing its assistance to Uganda after allegations of misuse of public funds. Donors including the U.K., Ireland and Denmark have cut aid after reports of embezzlement of funds intended for development projects.
The Tanzanian shilling strengthened 0.6 percent to 1,600 a dollar, poised for the biggest gain since March 29.
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