Kenya Shilling Swings Near December 2011 Low as Dollars Dry Up

Kenya’s shilling fluctuated near the lowest level since December 2011 as revenue from the East African nation’s biggest sources of foreign currency slumped at a time when importers are seeking dollars.

The currency weakened as much as 0.2 percent to 89.50 per dollar before trading little changed at 89.32 by 12:13 p.m. in Nairobi, the capital. An oversupply of tea in the global market curbed earnings from the crop and security concerns are keeping some tourists away.

“Demand for dollars by importers far outweighs supply,” Joshua Anene, a trader at Commercial Bank of Africa Ltd., said today by phone. “At the current level of the shilling, only direction intervention by the central bank can pause the depreciation.”

Sales every day this week of term-auction deposits and repurchase agreements, used by the Central Bank of Kenya to pull shilling liquidity from the market, haven’t been enough to halt the slide in currency, which is down 3.5 percent this year against the dollar.

Earnings from tea fell 31 percent in the year through June to 35.5 billion shillings ($397 million) as prices dropped, Kenya Tea Development Agency Chief Executive Officer Lerionka Tiampati said yesterday in Nairobi. Kenya is the world’s largest exporter of black tea.

Lower earnings from tourism, the second-largest source of foreign exchange, prompted the government to cut its 2014 economic forecast to about 5.5 percent from 5.8 percent, Treasury Secretary Henry Rotich said Sept. 12.

Uganda’s shilling weakened 0.1 percent to 2,615 per dollar in Kampala, while Tanzania’s currency retreated 0.2 percent to 1,668.

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