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Kenya’s shilling advanced, reversing an earlier decline, and headed for its strongest level in almost 13 months as the central bank said there is a “tight” money market.
The currency of East Africa’s biggest economy gained as much as 0.8 percent and was trading 0.3 percent stronger at 82.20 per dollar by 11:53 a.m. in Nairobi. A close at that level would be the highest since Feb. 25, 2011, according to data compiled by Bloomberg.
“The shilling gain is being driven by tight liquidity seen in the money market with interbank rates being elevated,” Raphael Agung, a dealer at Nairobi-based Commercial Bank of Africa Ltd., said in a phone interview today. “The planned $600 million foreign currency-denominated loan by the government is also contributing” to the shilling’s advance, he said.
The average interbank rate increased to 23.08 percent, the central bank said in its weekly bulletin on March 9.
“The money market was tight in the week ending March 7, partly due to continued remittances of taxes to government as well as increased net government borrowing,” the central bank said.
Kenya is looking to obtain $600 million in foreign loans to finance infrastructure projects.
Tanzania’s shilling depreciated 0.3 percent to 1,595 per dollar, while the Ugandan shilling weakened 0.3 percent to 2,447 against the dollar.
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