Johnstone Ole Turana
Oct. 4 (Bloomberg) -- Kenya’s shilling weakened for a third day against the dollar as concern that Europe’s debt crisis is worsening cut demand for riskier assets.
The currency of East Africa’s biggest economy depreciated as much as 1.1 percent to 102.40 per dollar and traded 0.7 percent weaker at 102 by 1:34 p.m. in Nairobi.
European finance ministers have postponed a decision to release Greece’s next loan installment until after Oct. 13. The vote was originally scheduled for yesterday, as part of the 110 billion-euro ($145 billion) lifeline given to Greece last year. The finance chiefs are considering “technical revisions” to a July deal for a second Greek aid package, Luxembourg Prime Minister Jean-Claude Juncker said today.
“The shilling is under pressure due to the unresolved euro crisis which is causing a shift to less risky dollar-denominated assets,” Jeremiah Kendagor, acting head of trading at Nairobi- based Kenya Commercial Bank Ltd., said in a phone interview.
The shilling has depreciated 21 percent this year, making it the world’s worst performer against the dollar. Inflation accelerated for the eleventh consecutive month in September to 17.3 percent compared with 16.7 percent in August, more than triple the government’s target, on rising food and fuel costs.
Prime Minister Raila Odinga last week formed a team of government officials and industry leaders to devise ways to help smooth volatility in the currency market. The panel is expected to release its recommendations this week.
The central bank’s Monetary Policy Committee meets tomorrow, its second gathering in three weeks. In an emergency session on Sept. 14, it raised its main interest rate by 0.75 percentage point to 7 percent.
--Editors: Ana Monteiro, Wojciech Moskwa
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