Bloomberg News

Kenyan Shilling Snaps Seven-Day Rally on Increased Dollar Demand

February 02, 2012

Feb. 2 (Bloomberg) -- Kenya’s shilling snapped a seven-day rally on increased demand for dollars whose recent weakness brought in buyers.

The currency of East Africa’s biggest economy depreciated 0.2 percent at 83.75 per dollar as of 5:02 p.m. in the capital, Nairobi, according to data compiled by Bloomberg.

“The shilling has weakened as buyers come in to accumulate dollars at the favourable rates witnessed in the last couple of days,” Duncan Kinuthia a dealer at Nairobi-based Commercial Bank of Africa Ltd., said in a phone interview today.

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 has strengthened 1.6 percent this year after weakening 5.3 percent last year, according to data compiled by Bloomberg.

Tanzania’s shilling rose for a second day this week on lower dollar demand. The currency of the second-biggest economy in East Africa appreciated as much as 0.3 percent and traded 0.1 percent higher at 1,590 per dollar as of 4:02 p.m.

“The shilling has gained due to low dollar demand by businesses clearing their monthly payments,” Hamis Mwakibete, Head Trading Commercial Bank of Africa Tanzania Ltd., said today by phone from Dar es Salaam, the commercial Capital.

Uganda’s shilling advanced on increased dollar inflows from investors in government securities. The currency of the third- biggest economy in East Africa gained as much as 1 percent before paring its gain to 0.7 percent at 2,317.50 per dollar as of 4:18 p.m.

“The shilling gained 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.

-- With assistance from Fred Ojambo in Kampala and David Malingha Doya in Dar es Salaam. Editors: Ash Kumar, Peter Branton

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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