Kenya’s shilling swung between gains and losses against the dollar as increased dollar inflows from coffee sales countered growing demand for the U.S. currency before next month’s elections.
The currency of East Africa’s biggest economy strengthened 0.1 percent to 87.49 per dollar by 4:15 p.m. in Nairobi, the capital, after retreating as much as 0.2 percent earlier, according to data compiled by Bloomberg.
Kenya’s coffee prices rose 3.3 percent, with sales at the auction nearly doubling to $2.07 million from $1.05 million last week, the Nairobi Coffee Exchange said yesterday by e-mail. Kenya is Africa’s fifth-biggest exporter of the beans.
“The dollar inflows from the sale of coffee have supported the shilling,” John Muli, a dealer at Nairobi-based African Banking Corp., said by phone. “There is growing demand for dollars in the market putting pressure on the shilling, a situation that may see it weakened going forward.”
Kenya will hold its presidential vote on March 4, the first since a disputed 2007 ballot sparked two months of violence in which more than 1,100 people died. The currency may decline to 89 a dollar by voting day, according to a Bloomberg News survey of analysts and traders last month.
“Demand for dollar is building up with businesses preferring to hold more dollars as we head to the elections,” Duncan Kinuthia, head of trading at Commercial Bank of Africa Ltd., said by phone from Nairobi.
Uganda’s currency weakened for a fourth day, the longest losing streak since Jan. 22, depreciating by 0.5 percent to 2,680 per dollar, while the Tanzanian shilling fell 0.2 percent to 1,621.03 per dollar.