Kenya’s shilling fell, weakening the most in more than two weeks, as fuel prices increased.
The currency of East Africa’s biggest economy retreated as much as 0.3 percent, the biggest depreciation since March 30, before paring its decline to to less than 0.1 percent at 83.18 shillings per dollar by 5:27 p.m. in Nairobi.
“The prices of fuel have depressed the shilling,” Jeremiah Kendagor, head of trading at Nairobi-based Kenya Commercial Bank Ltd., said in a phone interview today. Higher fuel prices can push up inflationary expectations, proving a negative for the shilling, he said.
Kenya yesterday raised the maximum permissible prices for gasoline, kerosene and diesel for a second month. The most commonly-used gasoline grade, super petrol, increased by 6.81 shillings to 118.50 shillings ($1.43) a liter, the Nairobi-based Energy Regulatory Commission said in an e-mailed statement. Kenya imports all the fuel products it consumes.
“In the last two months there has been a steep upward trend in the prices of crude in the international market,” the regulator said.
Kenya will continue its “tightening monetary policy” stance to curb inflation and stabilize its currency, Finance Minister Njeru Githae said April 11. The inflation rate fell for a fourth month to 15.61 percent in March from 16.69 percent in February, the Kenya National Bureau of Statistics said last month. Rising oil prices are a risk to the inflation outlook, Central Bank governor Njuguna Ndung’u said March 6.
Uganda’s shilling strengthened for a second day, up 0.1 percent to 2,500 per dollar.
“The minimal movement was dictated by some dollar inflows while demand has been subdued as some companies are concentrating on mid-month tax payments,” Peter Mbowa, a currency trader at Kenya Commercial Bank Ltd. (KNCB)’s Ugandan unit, said by phone from Kampala.
Tanzania’s currency appreciated by 0.1 percent to 1,583 per dollar, according to data compiled by Bloomberg.
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