Bloomberg News

Kenya Shilling Slides First Day in Six on Stronger Dollar Demand

November 23, 2011

Nov. 23 (Bloomberg) -- Kenya’s shilling, the world’s best- performing currency against the dollar this month, weakened for the first time in six trading days as dollar demand increased.

The currency of East Africa’s biggest economy depreciated 0.7 percent to 90.25 per dollar at 4:08 p.m. in Nairobi.

Kenya’s monetary policy committee increased the key lending rate by 5.5 percentage points to a record 16.5 percent on Nov. 1 as it battles to contain inflation spurred by the worst regional drought in 60 years and higher fuel prices. Inflation accelerated to 18.9 percent in October from 17.3 percent in the previous month, the government said Oct. 28.

“The shilling has weakened due to renewed dollar demand on account of the recent rally of the local currency,” Bernard Matimu, chief dealer at Nairobi-based NIC Bank Ltd., said by phone. The shilling appreciated to as strong as 89.30 yesterday, the highest level since July, according to data compiled by Bloomberg.

Uganda’s currency weakened 1.6 percent to 2,570, dropping for the second day as dollar demand increased.

“The shilling weakened because of interbank buying of the dollar,” Faisal Bukenya, the head of currency trading at Barclays Bank Uganda Ltd. said by phone from Kampala. “We haven’t seen any activities by customers, it is purely banks covering their dollar positions.”

The Tanzanian shilling weakened for the first day in seven, dropping 0.4 percent to 1,707.50 per dollar, as traders demanded dollars.

“There is demand for the dollar coming from some corporate customers and traders,” Hakim Sheik, a dealer with Commercial Bank of Africa Tanzania Ltd., said by phone from Dar es Salaam, the commercial Capital.

Ghana’s cedi slumped 0.4 percent to 1.632 per dollar.

--With assistance from Fred Ojambo in Kampala and David Malingha Doya in Dar es Salaam. Editors: Linda Shen, Alan Purkiss

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


Burger King's Young Buns
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

 
blog comments powered by Disqus