(Updates with shilling value in the third paragraph.)
June 17 (Bloomberg) -- Kenya’s government has no plans to stem the shilling’s weakness against the dollar even as it is concerned about the drop, Finance Minister Uhuru Kenyatta said.
“We don’t want to say that we are going to interfere with market forces” even though there is “some concern” over the shilling’s depreciation, Kenyatta told reporters today in Nairobi, the capital.
The shilling’s 10 percent depreciation since the start of the year against the dollar has fueled rising inflation and undermined economic growth. Annual price growth in East Africa’s biggest economy accelerated to a 25-month high of 12.95 percent in May as food and fuel costs rose. The government expects economic growth to slow to 5.3 percent this year, from 5.6 percent in 2010.
The shilling gained 0.3 percent to 89.75 per dollar by 10:47 a.m. in Nairobi, after reaching 90.95 yesterday, the weakest intraday level in 17 years.
Higher global crude prices have increased demand for dollars by fuel importers, in a country where oil purchases account for a fifth of the average monthly import bill, according to Central Bank of Kenya data published in March.
The weakening currency is a “situation that has to be monitored very keenly, especially in the scenario of rising prices of fuel and other imported commodities that are essential,” Kenyatta said.
--Editors: Ana Monteiro, Linda Shen
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