Kenya Shilling Drops Most in Three Weeks on Seasonal Imports
Kenya’s shilling weakened the most in more than three weeks as importers bought dollars before the year-end festivities.
The currency of East Africa’s biggest economy depreciated 0.3 percent to 86.10 a dollar, the biggest decline since Nov. 19, in Nairobi, the capital. The currency retreated less than 0.1 percent in the past five days.
Imports in Kenya rise during the Christmas and year-end period as companies anticipate higher sales. Nakumatt Holdings, the country’s biggest retail chain by outlets, expects to grow its festive season sales by 17 percent from $150 million last year, Atul Shah, the managing director, said in an e-mailed statement on Dec 12.
“The shilling has weakened on increased dollar demand by oil importers and retail businesses importing household goods for sale ahead of the holidays,” Chris Muiga, a senior currency dealer at Nairobi-based Kenya Commercial Bank Ltd. (KNCB), said by phone. “The market is experiencing a front loading of dollars before the festive season.”
The Central Bank of Kenya accepted 7 billion shillings ($81 million) of seven-day repurchase-agreements, a bank official, who asked not to be identified in line with policy, said by telephone.
The bank removed a record 17 billion shillings through the seven day repurchase agreement yesterday, bringing the total this week to 29 billion shillings, compared with 23.95 billion shillings last week, according to data compiled by Bloomberg.
“The regular mop up of liquidity has provided support to the shilling, which if it was not there would have weakened strongly due to the dollar demand,” John Muli, a dealer at Nairobi-based African Banking Corp., said on phone.
The Ugandan shilling gained 0.6 percent to 2,660 a dollar. Tanzania’s shilling weakened less than 0.1 percent to 1,599 a dollar.
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