Bloomberg News

Kenya’s Central Bank Sells Dollars; Shilling Strengthens

September 13, 2011

(Updates with Kibaki comments in fourth paragraph, central bank in eighth.)

Sept. 13 (Bloomberg) -- Kenya’s shilling strengthened as much as 1.6 percent as traders said the central bank sold dollars in the foreign-exchange market.

The currency was trading at 94.45 against the dollar at 3:38 p.m. in Nairobi, the capital, after earlier strengthening to as high as 93.95. It closed at 95.48 yesterday. It was the second time in a week the central bank acted to boost the shilling, after it sold dollars on Sept. 6.

“The central bank is in the market selling dollars, an indication that it’s backing up the stand taken by the president on support for the local currency,” Duncan Kinuthia, a trader at Nairobi-based Commercial Bank of Africa Ltd., said in a phone interview. Jeremiah Kendagor, acting head of treasury at Kenya Commercial Bank Ltd., said the central bank was had made “enquiries” in the market.

President Mwai Kibaki said last week his government had asked the International Monetary Fund for an early release of funds from its Extended Credit Facility to help stabilize the shilling, Africa’s second-worst performing currency this year after neighboring Uganda. Kibaki also urged financial regulators to “deal firmly deal with any speculators” in currency trading.

Joseph Tirop, head of trading at the Central Bank of Kenya, declined to comment about the bank sale of dollars in the market when contacted today.

--Editors: Paul Richardson, Gavin Serkin

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

To contact the editor responsible for this story: Paul Richardson at pmrichardson@bloomberg.net.


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