Dec. 28 (Bloomberg) -- Kenya’s shilling weakened a second day against the dollar on speculation that consumer and government spending increased the currency’s supply.
The currency of East Africa’s largest economy depreciated 0.4 percent to 84 by 12:55 p.m. in Nairobi, the capital, heading for the lowest close in almost two weeks.
“We have seen liquidity improving in the money markets as the government spends taxes it collected last week, putting it back into the system,” Dickson Magecha, a dealer at Nairobi- based Standard Chartered Bank Kenya Ltd., said by phone. “The government is paying salaries which people are spending.”
The Ugandan shilling retreated 1.4 percent against the dollar to 2,475. A close at this level would be the lowest since Dec. 7.
“The depreciation of the shilling is driven by interbank demand as they are covering their short dollar positions,” Dickson Musoni, head of currency trading at the Ugandan unit of Kenya Commercial Bank Ltd., said by phone from Kampala today.
Tanzania’s currency strengthened 0.4 percent to 1,588 per dollar.
“The shilling has appreciated today on account of the central bank intervention to support the shilling by supplying dollars to the market,” Hamis Mwakibete, head of trading at Commercial Bank of Africa Tanzania Ltd., said by phone from Dar es Salaam, the commercial capital.
“We have seen some demand coming in from the oil sector although not yet significant to change the trend of the currency.”
--With assistance from Fred Ojambo in Kampala.Editors: Ash Kumar, James Kraus
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