Kenya’s shilling posted its biggest weekly decline in eight months as an increase in demand for dollars from companies coincided with a fall in inflows from key export industries.
The currency of East Africa’s biggest economy weakened less than 0.1 percent today to 87.45 a dollar as of 5:25 p.m. in Nairobi. That extended its weekly drop to 0.7 percent, the biggest since the five days through May 25. The shilling has depreciated 1.5 percent this year, compared with a 5.6 percent loss for South Africa’s rand and 7 percent for Malawi’s kwacha, the continent’s worst performer.
“Kenya’s shilling weakened due to heavy demand for dollars from importers amid reduced inflows from agriculture, tourism and diaspora remittances,” Nairobi-based NIC Bank Ltd. said in a note e-mailed today.
Foreign exchange reserves declined to $5.18 billion for the week ending Jan 24, from $5.26 billion previous week, the central bank said on its website. The Kenyan shilling may weaken 1.7 percent to 89 a dollar over the next five weeks as businesses accumulate dollars on concern March 4 elections may spark violence, according to a Bloomberg News survey of eight analysts and traders on Jan. 23 showed. The median forecast was 88 a dollar by voting day.
The vote will be the first since a disputed 2007 poll sparked two months of clashes in which more than 1,100 people died. The currency lost 9.9 percent between the vote on Dec. 27, 2007, and Feb. 27, 2008, the day before an agreement to end the violence was signed, according to data compiled by Bloomberg.
Tanzania’s shilling depreciated less than 0.1 percent to 1,611 per dollar, retreating for a second day. The Ugandan shilling was unchanged at 2,675 a dollar.