Bloomberg News

Kenyan Shilling Weakens Second Day as Oil Companies Buy Dollars

March 15, 2012

Kenya’s shilling weakened for a second day as oil importers bought dollars to pay for mid-month purchases.

The currency of East Africa’s biggest economy depreciated 0.2 percent to 82.45 by 2:18 p.m. in Nairobi, the capital.

“There is demand from oil importers,” John Muli, a trader at Nairobi-based African Banking Corp. said in a phone interview today. “It is mid-month and this is when they normally make their purchases.”

Pump prices of so-called super petrol, the most commonly used gasoline grade, increased 0.3 percent to 111.69 shillings ($1.36) a liter (0.3 gallons) in Nairobi, the Energy Regulatory Commission said in an e-mailed statement yesterday. The price of kerosene, a fuel used for cooking and lighting, rose 0.39 shillings to 84.13 shillings, while diesel costs decreased by 0.17 shillings per liter to 105.12 shillings, the industry regulator said.

Kenyan lawmakers yesterday “unanimously approved” a parliamentary report that calls for changes at the country’s central bank, including more oversight of monetary policy makers and merit-based recruitment of the bank’s governor, Adan Keynan, chairman of the parliamentary committee that prepared the report, said in a phone interview today from Helsinki.

Investors and politicians criticized Governor Njuguna Ndung’u last year for waiting too long to raise the bank’s key lending rate as inflation soared and the shilling dropped by about 25 percent to a record low of 106.75 in October.

Tanzania Shilling

The shilling’s decline today brings its appreciation for the year to 2.9 percent, making it the third best-performing currency in Africa after the Namibian dollar and the South African rand.

Tanzania’s shilling moved in a narrow range of 0.3 percent.

“There is very little volatility because the central bank is there to support the shilling whenever demand comes in,” Fred Siwale, a dealer with CRDB Bank Plc. (CRDB), said by phone from Dar es Salaam, the commercial Capital. “This is why the shilling is trading almost at same levels this week.”

The Ugandan shilling weakened by less than 0.1 percent to 2,472 dollars after having risen as much as 0.7 percent.

To contact the reporter on this story: Eric Ombok in Nairobi at eombok@bloomberg.net

To contact the editor responsible for this story: Shaji Mathew at shajimathew@bloomberg.net


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