Bloomberg News

Kenya Shilling Weakens on Higher Dollar Demand By Oil Importers

January 09, 2012

Jan. 9 (Bloomberg) -- Kenya’s shilling depreciated for the second day on increased dollar demand from oil importers.

The currency of East Africa’s biggest economy weakened as much as 0.8 percent to 87.65 per dollar and traded 0.4 percent down at 87.35 at 2:12 p.m. in Nairobi.

“The shilling has weakened due to increased dollar demand by oil importers,” John Muli, a trader at Nairobi based African Banking Corp., said in a phone interview today.

Kenya’s central bank accepted all of the 3.05 billion shillings ($34.9 million) of bids it received for seven-day repurchase agreements, after offering 3 billion shillings, said a trader at the Nairobi-based bank. The bank accepted the offers at a rate of 17.508 percent, the trader said.

In a repurchase agreement an investor agrees to sell a security to another trader, while at the same time arranging to buy it back at a future date and at a pre-determined price.

The Tanzanian shilling gained for a second day, the longest winning streak this year, as the central bank sold dollars.

The currency appreciated 0.1 percent to 1,588 per dollar at 2:02 p.m. in Dar es Salaam, the commercial capital, the longest streak since Dec 29.

“The central bank has intervened selling dollars to the market today, and more inflows are coming in from the non- governmental organisations,” Hamis Mwakibete, Head Trading Commercial Bank of Africa Tanzania Ltd., said by phone from Dar es Salaam, the commercial Capital.

Uganda’s currency remained unchanged at 2,455 to the dollar.

--With assistance from Fred Ojambo in Kampala. Editors: Peter Branton, Gavin Serkin

To contact the reporters 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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