Kenya Shilling Gains for a Second Day on Central Bank’s Mop-Up
Kenya’s shilling gained for the second time as the central bank continued to remove money from the market.
The currency of East Africa’s biggest economy appreciated 0.1 percent to close at 86.55 a dollar in Nairobi, the capital.
“The shilling has received support from the persistent mop-up by the central bank,” John Muli, a dealer at Nairobi- based African Banking Corp., said by phone today. “The outlook is for a weaker shilling but we have seen the central bank coming in to sell dollars to ensure the shilling does not weaken rapidly.”
The currency slipped 0.5 percent last week after the Central Bank of Kenya cut its benchmark interest rate from 11 percent to 9.5 percent. The central bank has sold dollars on three occasions since the beginning of the year, according to data compiled by Bloomberg.
The shilling is expected to depreciate “modestly” to 88 a dollar by the end of the year and 90 by 2014, Morgan Stanley said in a research note on Jan 14.
The central bank accepted 4 billion shillings ($46 million) of seven-day repurchase agreements, a bank official who asked not to be identified in line with policy, said by phone today. The bank, which had offered 4 billion shillings, received bids of 4.9 billion shillings, he said. The repos are used by the regulator to withdraw money supply from banks and support the shilling.
The Ugandan shilling weakened 1.6 percent to close at 2,714.50 a dollar, while Tanzania’s shilling appreciated 0.4 percent to close at 1,601 a dollar.
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