Kenya Shilling Falls to 1-Month Low as Factories Buy DollarsJohnstone Ole Turana
Kenya’s shilling retreated for a fourth day to the lowest in a month as energy companies and manufacturers bought dollars before elections next month.
The currency of East Africa’s biggest economy slipped as much as 0.5 percent to 88.05 per dollar, the lowest intraday level since Jan. 5. It was trading less than 0.1 percent weaker at 87.65 as of 5:23 p.m. in the capital, Nairobi.
Kenya 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 currency may decline to 89 a dollar by voting day, according to a Bloomberg News survey of analysts and traders last month.
An increase in dollar purchases from energy and manufacturing companies “outweighed” sales of the U.S. currency, Nairobi-based NIC Bank analysts, including Chief Dealer Bernard Matimu, said in an e-mailed note to clients. Efforts by the central bank to “keep a tight rein on liquidity” is cushioning the shilling from “sliding drastically,” the analysts said, predicting a range of 87.40 to 87.80 per dollar for the currency.
The central bank uses repurchase agreements to withdraw money supply from the market and support the shilling. It accepted all 9.75 billion shillings ($111 million) of seven-day repos at an auction today, said an official who asked not to be identified in line with policy. The bank had offered 10 billion shillings of repos.
Tanzania’s shilling snapped a six day losing streak, appreciating 0.4 percent to 1,617 per dollar, while the Ugandan shilling weakened less than 0.1 percent to 2,655 per dollar.