Kenya’s Shilling Weakens for Fourth Day Amid Election ConcernJohnstone Ole Turana
Kenya’s shilling depreciated for a fourth day as concern that scheduled elections in March may trigger violence outweighed attempts by the central bank to support the currency.
The currency of East Africa’s biggest economy retreated as much as 0.3 percent to 87.83 a dollar and traded 0.2 percent down at 87.75 as of 1:15 p.m. in Nairobi. The shilling has slid 1.7 percent this year, compared with a 0.5 gain for Uganda’s shilling and a 0.2 percent advance in Ghana’s cedi.
The Central Bank of Kenya sold an unspecified amount of dollars for the sixth consecutive day amid concern the shilling will weaken further before the March 4 vote, the first since a disputed 2007 poll sparked two months of violence in which more than 1,100 people died. The currency may slide to 88.56 a dollar over the next five weeks as businesses accumulate dollars, according to the mean estimate in a Bloomberg News survey of eight analysts and traders on Jan. 23.
“The weakening of the shilling is due to the elections which have created political uncertainty with a slowdown on investment inflows at a time when earnings from exports are not strong enough to meet local dollar demand,” said Solomon Alubala, head of trading at National Bank of Kenya Ltd. “The central bank selling of dollars is slowing down the momentum but the month-end demand for dollars is strong.”
An official in the bank’s foreign-exchange department, who asked not to be identified in line with policy, confirmed the dollar sales.
The bank offered 10 billion shillings ($114 million) of seven-day repurchase agreements for sale today, the highest amount this year, an official in the money market department, who also asked not to be identified, said by phone. The repos are used by the regulator to withdraw money supply from banks and support the shilling.
Tanzania’s shilling increased 0.2 percent to 1,607 a dollar, while the Ugandan shilling advanced 0.2 percent to 2,665 a dollar.