June 16 (Bloomberg) -- The Kenya shilling weakened to the lowest level in 17 years as demand for the dollar rose amid speculation companies will need to pay for more imported fuel.
The currency of East Africa’s biggest economy declined as much as 2.9 percent to the lowest level since March 1994, and traded 1.6 percent weaker at 89.80 per dollar at 3:52 p.m. in the capital, Nairobi.
“The weakening of the shilling is due to a demand and supply mismatch with speculation of an increase in imports of fuel for thermal generation,” Chris Muiga, a senior dealer at Nairobi based Kenya Commercial Bank Ltd., said by phone today.
Rain between March and May, the nation’s long wet season, was “highly depressed” in most parts of the country, curbing hydropower output and damaging crops, the Kenya Meteorological Department said on May 26. Kenya Electricity Generating Co., the largest power producer in the country, boosted output from its oil-fired plants because of the weather, Mike Njeru, corporate affairs manager at the company, said in an e-mailed response to questions on June 14.
“We are keeping our hydro generation below maximum while increasing thermal generation,” Njeru said.
Policy makers received bids worth 2 billion shillings ($22 million) and rejected all of the bids for the 1 billion shillings worth of repurchase agreements it offered, according to central bank data on Bloomberg.
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.
--Editors: Linda Shen, Gavin Serkin
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