Bloomberg News

Kenya Shilling Gains for 8th Day on Low Dollar Demand, Rate Hold

February 02, 2012

Feb. 2 (Bloomberg) -- Kenya’s shilling strengthened for an eighth day, the longest winning streak in 18 months, on low dollar demand and as the central bank kept rates on hold.

The currency of East Africa’s biggest economy appreciated as much as 0.4 percent and was trading 0.1 percent stronger at 83.50 per dollar at 11:03 a.m. in the capital Nairobi, headed for the longest series of gains since August 2010.

The central bank left the key lending rate at a record high for a second month to support the shilling and ensure consumer prices continue declining, it said yesterday in an e-mail statement. Kenya’s inflation rate fell for a second month to 18.3 percent in January from 18.9 percent in December, the Nairobi-based Kenya National Bureau of Statistics said on Jan 31.

“The shilling is gaining on account of low dollar demand and the decision to leave the central bank rate unchanged by the central bank, an indicator that the market is still responding to the tightening measures,” Bernard Matimu, chief dealer at Nairobi based NIC Bank Ltd., said in a phone interview today.

Tanzania’s shilling weakened, depreciating as much as 0.7 percent and last traded 0.1 percent lower at 1,594 per dollar.

Uganda’s shilling advanced on increased dollar inflows by investors in government securities. The currency of the third- biggest economy in East Africa appreciated as much as 0.5 percent and was trading 0.3 percent stronger at 2,325 per dollar.

“The shilling gaining because of market sentiments, with expectations of some conversions of dollars by offshore players who participated in yesterday’s bond auction since today is the settlement day,” Taib Lubega, a currency trader at Stanbic Bank Uganda Ltd. said by phone from the capital Kampala.

The East African nation yesterday sold 95 billion shillings ($41 million) worth of 5-year bonds with a yield of 17.9573 percent.

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

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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