Bloomberg News

Kenya Shilling Falls Most in 2 Weeks on Oil Importers’ Orders

March 30, 2012

Kenya’s shilling weakened the most in two weeks on increased dollar demand by oil importers seeking to place orders for the new month.

The currency of East Africa’s biggest economy retreated to close the day 0.6 percent down at 82.95 per dollar, the biggest slump since March 16.

“The shilling is under pressure as buyers from the energy sector continue to accumulate dollars ahead of the new month for placement of their orders,” Duncan Kinuthia, a dealer at Nairobi-based Commercial Bank of Africa Ltd., said in a phone interview today.

KenolKobil Ltd. (KNOC) won a tender to supply Kenya Petroleum Refineries Ltd. with a single cargo of 610,000 barrels of Murban crude oil in May, it said in an e-mailed statement on March 22.

The inflation rate declined for a fourth month to 15.61 percent in March from 16.69 percent in the previous month, the Nairobi-based Kenya National Bureau of Statistics said in an e- mailed statement today. On a monthly basis, prices rose 1.3 percent after falling 0.04 percent in February, it said.

The increase in the monthly rate is likely to see the central bank maintain the key benchmark rate when it meets on April 4, according to a note by Standard chartered Bank Plc.

The central bank left its key lending rate at a record high of 18 percent for a third month after increasing it six times last year to keep the inflation rate under check and support the shilling. The Kenyan currency has gained 28 percent since reaching a record low in October, the best performer among more than 170 currencies tracked by Bloomberg.

“We are unlikely to see any policy rate easing in Kenya until the early June MPC meeting at the earliest,” Razia Khan regional head of research for Africa at Standard Chartered, wrote in the note.

Tanzania’s shilling closed 0.4 percent weaker, the most since Feb. 17, at 1,591 to the dollar. The Ugandan shilling appreciated 0.3 percent to close at 2,506.88 per dollar after gaining as much as 0.5 percent to 2,502.5 during the day.

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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