Kenya’s shilling weakened for a third day, heading for the lowest in more than six months, as businesses sought more dollars ahead of the holiday season.
The currency of East Africa’s biggest economy declined 0.1 percent to 86.05 a dollar as of 10:28 a.m. in Nairobi, the capital, the weakest since June 1., according to data compiled by Bloomberg.
“The shilling has been under pressure this week from businesses buying dollars to stock up their operations ahead of the festive season,” Julius Kiriinya, a currency trader at Nairobi-based African Banking Corp., said by phone. “With more demand coming next week, the shilling may weaken to 86.10 to 86.50 levels” before regaining ground “on lower dollar demand in the last days of the year,” he said.
The Central Bank of Kenya has been selling repurchase agreements and term-auction deposits to reduce money supply and support the shilling. The bank removed 26.08 billion shillings from the money market from Dec. 3 through yesterday, according to data compiled by Bloomberg.
“The shilling has been fairly stable this year, supported by the relatively tight hold the central bank has kept on banking sector liquidity,” Nairobi-based NIC Bank Ltd., said today in a note to clients.
The Ugandan shilling weakened 0.2 percent to 2,694.49 a dollar, while the Tanzanian shilling depreciated less than 0.1 percent to 1,602.25 a dollar.