Bloomberg News

Kenyan Shilling Weakens a 4th Day as Oil Importers Seek Dollars

July 27, 2011

July 27 (Bloomberg) -- Kenya’s shilling depreciated for a fourth day as oil importers bought more dollars, anticipating greater demand as power outages drive businesses to rely on fuel for powering operations.

The currency of East Africa’s biggest economy slumped as much as 0.2 percent to 90.60 per dollar and traded less than 0.1 percent lower at 90.39 at 12:23 p.m. in Nairobi.

“The shilling has weakened on demand by oil importers on anticipation of increased use of diesel by businesses for their operation following the planned power cuts which start today,” Wilson Mutai, a dealer at Nairobi-based African Banking Corp., said in a phone interview today.

Kenya Power Ltd., the nation’s sole electricity distributor, said it will begin scheduled outages from July 27 amid a shortage caused by a lack of infrastructure and machine breakdowns.

The Central Bank of Kenya will raise its key lending rate 25 basis points to 6.50 percent, according to the median estimate of seven analysts surveyed by Bloomberg. Inflation in Kenya accelerated for the eighth consecutive month in June, reaching 14.5 percent, almost three times the government’s 5 percent target.

The decision will be announced in the afternoon.

--Editors: Linda Shen, Ana Monteiro

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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