June 20 (Bloomberg) -- Kenya’s shilling weakened against the dollar, paring the previous session’s gain, as concern mounted over Greece’s ability to repay debt, increasing investor aversion to riskier emerging-market assets.
The currency of East Africa’s biggest economy slumped as much as 0.7 percent to 90.23 per dollar and traded 0.6 percent down at 90.20 by 1:07 p.m. in the capital, Nairobi, compared with a close of 89.65 on June 17.
The euro weakened against the dollar and emerging-market stocks declined for a fourth day after European governments failed to agree on releasing a loan payment to spare Greece from default on its debts.
Risk aversion in frontier markets “is having a big play” in the shilling’s depreciation, Peter Mutuku, a trader at Nairobi-based Bank of Africa, said in a phone interview today.
“With risk aversion foreign investors will want to exit the country, weakening the currency.”
Greece needs parliamentary approval of a 78 billion-euro ($111 billion) package of budget cuts to ensure the payment of a fifth loan under last year’s 110 billion-euro bailout. Euro-area finance ministers pushed Greece to pass laws to cut the deficit and sell state assets, and left open whether the country will get the full 12 billion euros promised for next month.
--Editors: Ana Monteiro, Alex Nicholson
To contact the reporter on this story: Sarah McGregor in Nairobi at email@example.com
To contact the editor responsible for this story: Andrew J. Barden at firstname.lastname@example.org