Kenya’s shilling strengthened and headed toward the highest in nine trading days after the central bank removed more money from the market and dollar inflows from a weekly coffee auction pushed it higher.
The currency of East Africa’s biggest economy gained as much as 0.4 percent to 87.13 per dollar and traded 0.2 percent stronger at 87.30 by 12:58 p.m. in Nairobi, the capital. A close at that level will be the highest on a closing basis since Feb. 1, according to data compiled by Bloomberg.
“The shilling has received support from the inflow of dollars from the coffee auction at a time when demand for dollars is subdued,” Solomon Alubala, head of trading at National Bank of Kenya Ltd., said by phone. “The central bank’s persistent removal of money from the market has created a liquidity crunch supporting the shilling further.”
The weekly coffee auction brought in $1.05 million, according to the Nairobi Coffee Exchange. The Central Bank of Kenya offered 5 billion shillings ($57 million) of seven-day repurchase agreements, according to a central bank official, who asked not to be identified in line with policy.
The bank, which uses the repos to reduce money supply and support the shilling, has absorbed 113 billion shillings from the market this year, according to data compiled by Bloomberg.
Uganda’s currency weakened 0.1 percent to 2,645 per dollar, while the Tanzanian shilling gained 0.3 percent to 1,615 per dollar.