June 3 (Bloomberg) -- Kenya’s shilling rallied for the first day in three against the dollar, paring its biggest weekly drop in three weeks, as the central bank accepted more bids for bills at an auction yesterday than it offered.
The currency of East Africa’s biggest economy appreciated as much as 0.4 percent to 86.55 per dollar and was trading 0.2 percent stronger at 86.70 by 1:29 p.m. in the capital, Nairobi, paring its retreat this week to 1 percent.
The central bank accepted 9.9 billion shillings ($114.3 million) of bids for 5.5 billion shillings of 91- and 182-day debt at an auction, it said in an e-mailed statement yesterday. It received 18.3 billion shillings of bids. The bank accepted 75 million shillings of bids for repurchase agreements at 5.7 percent today, a central bank official who couldn’t be named in line with the bank’s policy said by phone from Nairobi today. In a repurchase agreement an investor agrees to sell a security to another trader, while at the same time arranging to buy it back at a future date and at a pre-determined price.
“The shilling has strengthened on the back of acceptance by the central bank of more bids for the short-term papers than it had offered, draining liquidity further from the market at a time it has been mopping up supply through the repurchase agreements,” Jeremiah Kendagor, head of trading at Nairobi based Kenya Commercial Bank Ltd., said in by phone today.
--Editors: Ana Monteiro, Peter Branton
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