Bloomberg News

Kenyan Shilling Declines to 2-Week Low as Companies Seek Dollars

January 03, 2012

Jan. 3 (Bloomberg) -- Kenya’s shilling weakened to its lowest level in more than two weeks, as companies and oil importers sought dollars after an extended holiday weekend over the New Year.

The currency of East Africa’s biggest economy depreciated 0.5 percent to 85.45 per dollar by 2:40 p.m. in Nairobi, the capital, reaching its weakest intraday trading level since Dec. 15, according to data compiled by Bloomberg.

“Since most companies are opening today after the holiday break we are seeing quite a bit of buying interest in dollars from them,” Duncan Kinuthia, head of trading with Commercial Bank of Africa Ltd., said by phone from Nairobi. “We’ve also seen a bit of demand from oil guys buying dollars.” The Kenyan market was closed yesterday.

The country’s central bank didn’t receive any bids for the 5 billion shillings ($58.5 million) of repurchase agreements it offered today, which was intended to mop up liquidity, Donald Murgor, a dealer at the Nairobi-based bank, said.

The Ugandan shilling headed for its biggest gain in more than two weeks, strengthening 1.2 percent to 2,440.50 per dollar, ahead of the sale of 95 billion shillings ($39 million) in three-year government bonds tomorrow.

“The gains are driven by dollar inflows from offshore investors ahead of tomorrow’s bond auction,” Timothy Muzoora, a currency trader at Cairo International Bank Ltd., said by phone from the capital Kampala.

Tanzania’s currency depreciated 0.2 percent to 1,585 per dollar, falling for a third session.

“The central bank has intervened in the market today by selling dollars,” Fred Siwale, a dealer with CRDB Bank Plc, said by phone from Dar es Salaam, the commercial capital. “Demand for dollars is mainly coming in from oil importers and the manufacturing sector.”

With assistance from David Malingha Doya in Dar es Salaam -- Editors: Ash Kumar, Shanthy Nambiar

--Editors: James Kraus, Gavin Serkin

--Editor: James Kraus

To contact the reporters on this story: Sarah McGregor in Nairobi at smcgregor5@bloomberg.net; Fred Ojambo in Kampala at fojambo@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net


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