Kenya Shilling Snaps Two-Day Rally After Inflation AcceleratesJohnstone Ole Turana
Kenya’s shilling depreciated the most in more than a week, snapping a two-day rally, after the country’s inflation rate rose for the first time in 14 months.
The currency of East Africa’s biggest economy retreated as much as 0.6 percent to 87.62 per dollar and traded at 87.55 by 10:02 a.m. in Nairobi. The shilling has fallen 1.7 percent this year, compared with a 0.5 percent gain for the Ugandan shilling.
Kenyan inflation accelerated to 3.7 percent in January from 3.2 percent a month earlier, the Nairobi-based Kenya National Bureau of Statistics said yesterday in an e-mailed statement. That’s still below the government’s target of 5 percent. The country will hold its presidential vote on March 4, the first since a disputed 2007 poll sparked two months of violence in which more than 1,100 people died.
“The Kenyan shilling is still under pressure and with inflation edging up it will increase pressure on it as importers seek to buy dollars in advance of the elections,” Jeremiah Kendagor, head of trading at Nairobi-based Kenya Commercial Bank Ltd., said today.
The Central Bank of Kenya offered 2 billion shillings ($23 million) of seven-day repurchase agreements today, 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.
Tanzania’s shilling depreciated for the fourth day, weakening 0.5 percent to 1,626 a dollar, the lowest since December 2011, while the Ugandan shilling weakened less than 0.1 percent to 2,662.13 a dollar.