Bloomberg News

Kenya Shilling Gains Before Governor Ndung’u Speaks on Currency

June 23, 2011

June 23 (Bloomberg) -- Kenya’s shilling strengthened for a second day against the dollar after the central bank said Governor Njuguna Ndung’u will hold a briefing on “current concerns” as the currency slipped to a 17-year low this week.

The currency of East Africa’s biggest economy appreciated as much as 0.8 percent to 90.18 per dollar and was trading 0.7 percent stronger at 90.25 by 1:31 p.m. in the capital, Nairobi from yesterday’s close of 90.88.

The briefing will start at 3 p.m., Samson Burgei, head of communications at the bank, said by e-mail today. The announcement follows a report in Business Daily, a Nairobi-based newspaper, that the central bank plans to take regulatory action against three lenders to curb speculative trading in the currency market.

“The recovery is due to the central bank’s indication that it will intervene to stop the weakening” of the shilling, Duncan Kinuthia, a dealer at Nairobi-based Commercial Bank of Africa Ltd., said in a phone interview.

The shilling has depreciated 11 percent against the dollar this year, making it Africa’s worst-performing currency over the period. It reached 92.05 per dollar on June 22, the weakest intraday level since March 1994, when the central bank abolished control of the currency.

Investors didn’t bid for any of the 500 million shillings ($5.5 million) of repurchase agreements the central bank offered today, a third consecutive sale where no bids were received, according to the bank’s data on Bloomberg. The bank has bought 23.8 billion shillings of so-called repos to curb supply of the currency in the market since May 11.

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: Ana Monteiro, Stephen Kirkland

To contact the reporter on this story: Johnstone Ole Turana in Nairobi at jturana@bloomberg.net

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net


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