Kenya’s shilling fell to the lowest in almost three months against the dollar as the country said it plans to bring back a capital-gains tax and the stock market extended its losing streak to the longest in 18 months.
The government wants to re-introduce the tariff, which was suspended in the 1980s, “in order to raise more revenue,” Finance Ministry Permanent Secretary Joseph Kinyua said in a phone interview in the capital, Nairobi. “It will target the real-estate sector, which has recorded tremendous growth over the years. There are no immediate plans to levy the charge on stocks.”
The proposal was introduced in the 2013-14 budget announced last week. NIC Bank Ltd. dealer Margaret Wangeci said in an e-mailed note to clients today that the tax plan put investors “on the edge”.
The shilling depreciated 0.2 percent to 85.75 per dollar by 6:37 p.m. in Nairobi, the lowest since March 26, according to data compiled by Bloomberg. It’s gained 0.4 percent this year. The Nairobi Securities Exchange All Share Index dropped for a 9th day, the longest stretch of losses since December 2011, retreating 0.7 percent to 118.78.
Kenya’s credit rating is constrained by weak government finances and rising debt levels due to a growth rate that’s significantly below potential, Moody’s Investors Services said in a report dated on June 14 and e-mailed today. This has restricted the outlook for the B1 rating, it said.
Uganda’s shilling appreciated for a second day, rising 0.2 percent to 2,595 per dollar, while the Tanzanian shilling weakened to the lowest since December 2011, falling 0.7 percent to 1,641.50.