Bloomberg News

Kenya Shilling Falls First Day in Three After World’s Best Run

December 01, 2011

Dec. 1 (Bloomberg) -- Kenya’s shilling, the world’s best- performing currency against the dollar in the past month, weakened for the first day in three.

The currency of East Africa’s biggest economy depreciated as much as 0.6 percent to 90.02 per dollar and traded 0.4 percent weaker at 89.85 at 2:58 p.m in Nairobi. The currency has gained 9.5 percent since Nov. 1, making it the best performer among more than 170 currencies tracked by Bloomberg.

Kenya’s monetary policy committee is expected to keep its benchmark interest rate unchanged at 16.5 percent, according to the median estimate of 11 economists surveyed by Bloomberg. Spurred by the worst regional drought in 60 years and higher fuel prices, inflation accelerated 19.7 percent in November from 18.9 percent the previous month.

“The shilling has weakened largely on account of demand with the market awaiting today’s decision by the central bank monetary policy body,” Chris Muiga, a senior dealer at Nairobi- based Kenya Commercial Bank Ltd., said by phone today.

The Tanzanian shilling strengthened 0.4 percent to 1,679 per dollar as the central bank sold dollars to meet demand from oil importers.

“Bank of Tanzania is still providing dollars to the market even today, which explains the appreciation of the shilling against the dollar,” Julius Mcharo, head of treasury at Commercial Bank of Africa Tanzania Ltd., said by phone from Dar es Salaam, Tanzania.

The Uganda’s currency appreciated for fourth day, adding 1 percent to 2,538.75 per dollar.

“The shilling has gained because of a tight monetary position in the market following the settlement of treasury bills auctioned yesterday,” Abbey Mutabali, a currency trader at Centenary Bank Ltd., said by phone from Kampala.

The East African nation’s central bank auctioned 120 billion shillings worth of three-, six- and 12-month Treasury bills.

--With assistance from David Malingha Doya in Dar es Salaam and Fred Ojambo in Kampala. Editors: Linda Shen, 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: Antony Sguazzin at asguazzin@bloomberg.net


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