July 8 (Bloomberg) -- Kenya’s shilling depreciated to the lowest in more than a week against the dollar as companies bought the U.S. currency on speculation the shilling will weaken further as the country increases corn imports.
The currency of East Africa’s biggest economy slipped as much as 0.6 percent to 90.20 per dollar and traded 0.5 percent down at 90.10 per dollar by 11:55 a.m. in Nairobi, the capital, extending its drop this week to 1.6 percent. A close at this level will be the weakest since June 28.
“The shilling is under pressure as businesses seek to accumulate dollars on anticipation of further weakening in the coming days driven by importers buying,” Jeremiah Kendagor head of trading at Nairobi-based Kenya Commercial Bank Ltd., said in a phone interview today. “We expect it to trade within the 89.70 to 90.35 per dollar in the coming days.”
Kenya’s government received a shipment of 8,000 metric tons of corn, the nation’s staple food, on July 6 to help ease shortages in the drought-affected country, Diamond Lalji, chairman of the Cereal Millers Association, said yesterday. Another shipment is expected next week, with plans to import 54,000 tons from Zambia and Malawi this year, Lalji said.
The shilling depreciated to the weakest in 17 years against the dollar on June 22, raising the cost of imports. Kenya is feeling the effects of rising global commodity prices as a drought forces the country to import more food than it exports. Corn prices have increased 50 percent over the past 12 months.
--Editors: Ana Monteiro, Peter Branton
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