Bloomberg News

Kenya Shilling Strengthens for Second Day on Low Dollar Demand

February 13, 2012

Feb. 13 (Bloomberg) -- Kenya’s shilling strengthened for a second day on “low” dollar demand by businesses.

The currency of East Africa’s biggest economy appreciated as much as 0.7 percent to 82.40 per dollar and was trading 0.3 percent higher at 82.75 as of 11:39 a.m. in Nairobi.

“The shilling is stronger due to low dollar demand in the market by businesses and following the recent mop-up by the central bank,” Bernard Matimu, chief dealer at Nairobi-based NIC Bank Ltd., said in a phone interview today.

The central bank removed 10 billion shillings ($120 million) from the market last week through repurchase agreements, it said in a weekly statement on Feb 10.

Tanzania’s shilling also appreciated for a second day, trading 0.1 percent stronger at 1,590 per dollar, headed for the highest close since Jan 20.

The Ugandan shilling gained for a second day, reaching the highest in a year as businesses prepared to pay monthly taxes, damping demand for dollars. The currency of the third-biggest economy in East Africa appreciated as much as 0.2 percent to 2,306.50 per dollar at 12:50 p.m. A close at this level will be the highest since Feb. 3, 2011, according to data compiled by Bloomberg.

“The shilling is stronger today because customers are out of the market pending settlement of mid-month value-added tax, which has to be settled in local currency,” Benon Okwenje, a currency trader at Stanbic Bank Uganda Ltd., said by phone from Kampala.

-- With assistance from Fred Ojambo in Kampala. Editors: Peter Branton, Stephen Kirkland

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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