Kenya Shilling Extends Drop to 2011 Low as Attack Leaves 22 DeadDavid Malingha Doya
Kenya’s shilling weakened to extend a drop to a 3 1/2-year low and stocks retreated as Islamist gunmen killed at least 22 people and took hostages in a university campus raid.
The currency fell for the sixth day to register its fourth straight weekly loss. The FTSE NSE Kenya 25 Index fell the most in almost a month. Kenya’s $2 billion of Eurobonds due June 2024 ended a 10-day winning streak, sending yields climbing two basis points to 6.09 percent.
“These attacks cause negative sentiment,” John Muli, a currency trader at Nairobi-based African Banking Corp., said by phone. The U.K. warned its citizens last week against all but essential travel to some parts of Kenya, a move that may further scare off tourists, he said.
Terrorist attacks in East Africa’s largest economy increased after the government in 2011 sent troops into Somalia to fight al-Shabaab following a wave of kidnappings and the murder of a British tourist in Kenya that the government blamed on the group. Tourism is Kenya’s second-biggest foreign-exchange earner after tea exports, which are also under pressure amid a drought in growing areas that halved deliveries.
The shilling declined as much as 0.3 percent to 92.80 per dollar, the lowest since November 2011, before paring losses to trade at 92.77 by 4:23 p.m. in Nairobi. The currency has weakened 2.3 percent this year. The FTSE NSE Kenya 25 Index decreased 0.9 percent to 229.47, the biggest one-day fall since March 3, and paring gains this year to 6 percent.
With speculation mounting that the currency may weaken to 93 per dollar, some traders covered their positions before the Easter holiday period when markets will be closed, John Jenga, a foreign-currency dealer at Nairobi-based Commercial Bank of Africa Ltd., said by phone.
About 530 people are unaccounted for and 56 are in the hospital after the attack Thursday on Garissa University. Somali militant group al-Shabaab, which is linked to al-Qaeda, claimed responsibility for the attack. Garissa is located about 228 miles (367 kilometers) east of Nairobi and 90 miles from the border with Somalia.
Al-Shabaab has waged an insurgency in Somalia since 2006 in a bid to impose Islamic law. In September 2013, the militants claimed responsibility for an attack on the Westgate shopping mall in Nairobi that left 67 people dead. The country has also faced bombings in bars, churches and markets.