Kenya Shilling Weakens on Importers’ Seasonal Dollar Demand
Kenya’s shilling weakened, touching the lowest in more than six months, as importers bought dollars before the holiday season.
The currency of East Africa’s biggest economy depreciated less than 0.1 percent to close 85.95 a dollar, having weakened by as much as 0.4 percent earlier, in Nairobi, the capital.
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 2,683 a dollar, appreciating for a second day. Tanzania’s shilling traded unchanged at 1,600 a dollar.
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