Kenya’s reversed a four-day weakening trend after dollar inflows from coffee and tea sales increased and the central bank removed money from the market.
The currency of East Africa’s biggest economy strengthened 0.2% to 87.60 by 12:01 p.m., the first gain since Jan 23. according to data compiled by Bloomberg. The shilling has fallen 1.7 percent this year, compared with a 1.9 weakening in Tanzania’s shilling and a 6.5 percent drop for the South African rand.
Coffee sales climbed 6 percent to 5,949 bags worth $1.5 million from last week, the Nairobi Coffee Exchange said yesterday. Tea prices increased to $3.09 a kilogram from $3 at sale a week earlier in Mombasa, Kenya, Tea Brokers East Africa, which manages the sale, says in e-mailed statement today.
“The shilling recouped earlier losses as liquidity tightened and the central bank continued to support the local unit through aggressive selling of dollars,” Nairobi-based NIC Bank Ltd. said in a note to clients. The currency will trade between 87.20 and 87.70, according to NIC.
The central bank has sold an unspecified amount of dollars for the six consecutive days through yesterday and sold 8.7 billion shillings ($99 million) of seven-day repurchase agreements yesterday, the highest amount this year, according to data compiled by Bloomberg. The bank stayed out of the foreign-exchange market today, a central bank official who asked not to be identified in line with policy, said by phone.
The bank offered 10 billion shillings of seven-day repurchase agreements for sale today, an official in the money market department, who also asked not to be identified, said by phone. The central bank uses repos to mop up money supply from banks and support the shilling.
Tanzania’s shilling depreciated 0.3 percent to 1,618 a dollar, while the Ugandan shilling traded unchanged at 2,665 a dollar.