Kenya Shilling Drops to Two-Week Low on Higher Year-End Imports
Kenya’s shilling weakened the most in more than two weeks, bringing its decline to a six-month low, as importers bought dollars before the year-end festivities.
The currency of East Africa’s biggest economy depreciated 0.3 percent to 86.13 a dollar, the biggest fall since Nov 19, by 11:13 a.m. in Nairobi, the capital. A close at this level would be the lowest since May 31, according to data compiled by Bloomberg.
Imports in Kenya rise during the Christmas and year-end period as companies anticipate higher sales. Christians account for 87 percent of Kenya’s 38 million population, according to the CIA World Factbook. Remittances fell to $92.1 million in October from $92.5 million in September, the Central Bank of Kenya said yesterday. It rose 12.7 percent over the same period of last year.
“The shilling is on weaker footing as the oil importers and manufacturing sector front load their dollar demand ahead of the holidays,” Chris Muiga, a senior currency dealer at Nairobi-based Kenya Commercial Bank Ltd. (KNCB), said by phone. “The expectation is a weaker shilling at the beginning of the year to the range of 86.50 to 86.70 which has prompted a surge in demand for the dollar.”
Kenya’s current-account deficit widened by 35.3 percent to $4.3 billion in the year to September 2012 from $3.2 billion a year ago, as imports jumped 10.1 percent and exports climbed 2.9 percent, the bank said on its website on Dec. 6.
The Ugandan shilling gained 0.3 percent to 2,681 a dollar, appreciating for a second day. Tanzania’s shilling weakened less than 0.1 percent to 1,601 a dollar.
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