Bloomberg News

Kenya Shilling Gains for Fifth Day as Businesses Settle Bills

January 31, 2012

Jan. 30 (Bloomberg) -- Kenya’s shilling strengthened for the fifth day, the longest winning streak in more than two months, as supply was curbed by businesses settling their month- end bills.

The currency of East Africa’s biggest economy appreciated as much as 0.5 percent and was trading 0.3 percent stronger at 84.78 per dollar at 1:08 p.m. in the capital Nairobi.

“The shilling is gaining against the dollar on account of tight liquidity in the money market as businesses settle their monthly obligations,” John Muli a dealer at Nairobi-based African Banking Corp., said in a phone interview. “With the interbank rate rising the market sentiment is on a stronger shilling and we expect it to trade within the 83.50 to 84.50 range,” he said.

Kenya’s central bank did not receive any bids for its 1 billion shilling ($11.8 million), 7-day repurchase agreements offer, an official who declined to be identified in line with the bank’s policy said in a phone interview in Nairobi today. The average interbank rate increased to 19.25 percent last week, from 15.99 percent, the central bank said in its weekly bulletin on Jan 27.

Tanzania’s shilling weakened on increased dollar demand from oil and manufacturing companies. The currency of the second-biggest economy in East Africa depreciated as much as 0.3 percent to 1,603.30 and was trading 0.1 percent weaker at 1,600 at 1:05 p.m.

“There is demand coming in from oil and manufacturing importers,” Fred Siwale, a dealer with CRDB Bank Plc said by phone from Dar es Salaam, the commercial Capital.

Uganda’s shilling strengthened for a second day, rising 0.1 percent to 2,340 per dollar, the highest since April 13 on a closing basis.

-- With assistance from David Malingha Doya in Dar es Salaam Editors: Peter Branton, Linda Shen

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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