Bloomberg News

Kenya Shilling Falls to Three-Week Low on Higher Dollar Demand

January 04, 2012

Jan. 4 (Bloomberg) -- Kenya’s shilling weakened for a second trading day, depreciating to its lowest in three weeks, as importers bought dollars to pay for fuel shipments amid tight supplies of the U.S currency.

The currency of East Africa’s biggest economy retreated 2.5 percent to 87.70 per dollar by 5:06 p.m. in Nairobi, its weakest level since Dec. 14, according to data compiled by Bloomberg.

“Buyers are coming back into the market after the holidays, especially from the energy sector,” Solomon Alubala, a trader at Cooperative Bank of Kenya Ltd., said by phone from Nairobi. “As the tea auctions resume after the holidays, we should start see the selling of dollars again back in the market.”

The Ugandan shilling appreciated 1.3 percent against the dollar to 2,453, heading for its steepest gain in three weeks. The country’s central bank is selling today 95 billion shillings ($38.7 million) of government bonds maturing in 2015.

“Today’s bond auction attracted some dollars from offshore investors and yet people are short of the shilling locally to buy the dollar,” Abby Mutabali, a currency trader at Centenary Bank Ltd., said by phone from Kampala, the capital.

Tanzania’s currency depreciated for a fourth trading session, weakening 0.1 percent to 1,586.90, posting its longest streak of declines versus the dollar since October.

“The shilling depreciated on the back of customer demand from the manufacturing sector seeking dollars to import industrial inputs,” Fred Siwale, a dealer at CRDB Bank Plc, said today by phone from the commercial capital of Dar es Salaam.

--With assistance from Fred Ojambo in Kampala. Editors: Ash Kumar, Peter Branton

To contact the reporters on this story: Sarah McGregor in Nairobi at smcgregor5@bloomberg.net; David Malingha Doya in Dar es Salaam at dmalingha@bloomberg.net

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


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