Kenyan Shilling Strengthens on Reduced Money Supply, IMF Funding
Kenya’s shilling strengthened to a five-month high after the central bank restricted money supply by accepting just 21% of repo bids submitted and said funding from the International Monetary Fund will help fight inflation.
The currency of East Africa’s biggest economy appreciated as much as 0.8 percent to 88.75 per dollar before paring its gain to 0.6 percent at 89 as of 6:40 p.m. in Nairobi. A close at this level will be the highest since Jul 6, according to data compiled by Bloomberg.
Kenya’s central bank restricted liquidity released into the system via repurchase agreements. The bank received 9.55 billion shillings of bids for the 2 billion shillings it offered, Donald Murgor, an official at the bank’s money-market department, said by phone from Nairobi today. Of that, it accepted 2 billion shillings ($22.5 million) of bids for seven-day repo at a weighted average rate of 14.156 percent.
The IMF executive board approved “immediate disbursement of an amount equivalent to $143.7 million” after completing the second review of Kenya under its Extended Credit Facility, the board announced on Dec 9. Yesterday was a public holiday.
“It’s going to support us in the policy effort that we have to stabilize the exchange rate,” Central Bank Governor Njuguna Ndung’u told reporters in the capital, Nairobi, today. “We believe that we will win the war against inflation.”
Ugandan Shilling Stronger
Uganda’s currency, which strengthened for a fifth day, appreciated 0.2 percent to 2,445 per dollar, the maximum since June 14. “The shilling has gained because of dollar inflows from Ugandans living abroad amid low demand in the market as businesses wind down their operations for the year,” Walter Mananu, a currency trader at Bank of Africa Uganda Ltd. said by phone from Kampala.
The Tanzania shilling hardened for the fourth day, rising 0.5 percent to 1,605 as businesses prepare to pay taxes and on increase dollar inflow from non-governmental organization.
“We are receiving inflows from corporate clients who are offloading dollars to get shilling for making tax-related payments at this time of the year, and non-governmental organizations,” Hamis Mwakibete, head of trading at Commercial Bank of Africa Tanzania, said by phone today from Dare es Salaam, the commercial Capital.
-- Editors: Ash Kumar, Stephen Kirkland
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