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July 5 (Bloomberg) -- Kenya’s shilling declined, snapping the longest winning streak in three months against the dollar as companies increase demand for the U.S. currency after the shilling rose to the best level in almost three weeks yesterday.
The currency of East Africa’s biggest economy weakened for the first day in seven, losing 0.2 percent to 88.50 per dollar by 2:49 p.m. in Nairobi, the capital, from yesterday’s close of 88.35.
“Businesses have increase their demand for the dollar with the intention of accumulating due to what they see as good exchange-rate levels for the shilling, a situation that is likely to persist as demand for the greenback remains high,” Wilson Mutai, a dealer at Nairobi-based African Banking Corp., said in a phone interview today.
The shilling has strengthened 2 percent since the Central Bank of Kenya raised its overnight lending rate to banks on June 29 in an attempt to rein in inflationary expectations and curb speculative trade in the shilling, which reached the weakest in 17 years on June 22.
It also blocked the use of funds borrowed from the overnight window to trade in the foreign-exchange market. The overnight rate, which is reviewed daily, remained at 8 percent today, according to the Nairobi-based bank’s website.
--Editors: Ana Monteiro, Linda Shen
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