Bloomberg News

Kenyan Shilling Strengthens After Central Bank Sells Dollars

October 21, 2011

Johnstone Ole Turana

Oct. 21 (Bloomberg) -- Kenya’s shilling headed for a second week of gains after the central offered to sell an unspecified amount of dollars.

The currency of East Africa’s biggest economy appreciated as much as 0.8 percent to 99.30 per dollar and was trading 0.3 percent stronger at 99.85 by 12:58 p.m. in Nairobi, taking its gain this week to 0.4 percent. Yesterday was a public holiday.

An official at the Central Bank of Kenya, who declined to be identified in accordance with bank policy, wouldn’t disclose how much U.S. currency was sold.

“The shilling has strengthened on the back of central bank continued sale of dollars in the foreign exchange market,” Duncan Kinuthia a dealer at Nairobi-based Commercial Bank of Africa Ltd., said by phone today.

Kenya’s government reduced commercial banks foreign exchange exposure limit to 10 percent of core capital from 20 percent, Finance Minister Uhuru Kenyatta told reporters in Nairobi on Oct 13.

The central bank will “intensify” auctions of repurchase and reverse repurchase agreements, or repos, to manage liquidity, Governor Njuguna Ndung’u said, also on Oct. 13

The shilling has depreciated 19 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 from 16.7 percent in August, more than triple the government’s target.

--Editor: James Kraus

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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