Kenya’s shilling strengthened for the first time in four days after dollar inflows from tea sales and as investors awaited the outcome of a challenge to this month’s presidential election.
The currency of East Africa’s biggest economy gained as much as 0.2 percent to 85.55 per dollar and traded at 85.65 by 1 p.m. in the capital, Nairobi.
Kenya, the world’s biggest exporter of black tea, holds its weekly auction of tea at the sea port of Mombasa on Tuesdays. Outgoing Prime Minister Raila Odinga, whose dispute of the 2007 election triggered ethnic clashes that left more than 1,100 people dead, filed a petition on March 16, challenging the election of Uhuru Kenyatta as president during the March 4 elections. The nation’s highest court has 14 days to rule.
“The shilling has received support from inflows of dollars from the sale of tea,” John Muli, a dealer at Nairobi-based African Banking Corp., said by phone. “There is subdued demand for dollars as the market adopts a wait and see attitude following the filling of the case challenging the presidential elections.”
The court challenge is still a concern for the market and the shilling is likely to trade within a range of 85.60 to 86.20 per dollar today, Nairobi-based NIC Bank Ltd. said in a note to clients.
The shilling rose 0.9 percent from the March 4 vote to March 13, when demand for dollars picked up after business resumed. Since then, the currency has slipped 0.5 percent.
The Central Bank of Kenya offered 10 billion shillings ($116 million) in seven-day repurchase agreements, an official who asked not to be identified in line with policy said by phone today. The bank uses the repos to reduce money supply and support the shilling.
Uganda’s currency weakened for the second day, dropping less than 0.1 percent to 2,634.63 per dollar, while the Tanzanian shilling depreciated 0.3 percent to 1,628.35 per dollar.