Kenya Shilling Gains Most in 5 Months as Bank Receive Fewer Bids
Kenya’s shilling gained for the second day, strengthening the most in almost five months, as the central bank received fewer bids for repurchase agreements than the amount it offered.
The currency of East Africa’s biggest economy appreciated 0.5 percent to close at 87.10 per dollar, gaining the most since Sept 5., according to data compiled by Bloomberg.
The Central Bank of Kenya accepted all 200 million shillings ($2.3 million) of seven-day repurchase agreements today, having offered 4 billion shillings, an official who asked not to be identified in line with policy, said by phone. The bank uses the sales to withdraw money supply from the market and support the shilling.
“The shilling reprieve is due to the prevailing tight liquidity in the market occasioned by continuous removal of money by the central bank and businesses paying their bills,” Jeremiah Kendagor, head of trading at Nairobi-based Kenya Commercial Bank Ltd., said today. “Businesses are paying wages and utility bills, slowing down demand for the dollar.”
The central bank also sold 1.7 billion shillings of three- month treasury bills today, having offered 4 billion shillings.
The bank, which sold dollars to support the shilling from Jan. 22 through Jan 29., didn’t sell international currency for a second day today, an official in the bank’s foreign-exchange department, who also asked not to be identified in line with policy, said by phone.
The shilling has fallen 1.2 percent this month, a third month of losses, ahead of elections in March, the first since a disputed 2007 poll sparked two months of violence in which more than 1,100 people died. The shilling may fall 1.8 percent to 89 per dollar, according to a Bloomberg News survey of eight analysts and traders on Jan. 23.
Tanzania’s shilling depreciated for a third day, weakening less than 0.1 percent to close at 1,618 per dollar, the lowest since Dec 13, 2011, while the Ugandan shilling closed unchanged at 2,660 per dollar.
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