Bloomberg News

Kenya Shilling Weakens to Three-Month Low on Trade Deficit

May 02, 2012

Kenya’s shilling depreciated to the lowest in almost three months on concern that the nation’s trade deficit is widening.

The currency of East Africa’s biggest economy depreciated as much as 0.3 percent to 83.51 per dollar and was trading 0.2 percent weaker at 83.38 by 3:34 p.m. in Nairobi, set for the lowest since Feb. 9.

Kenya’s trade deficit widened 24 percent in February to 58 billion shillings ($695 million), up from 46.8 billion shillings a year earlier, as costs of imported food, machinery and transport equipment rose, the Nairobi-based Kenya National Bureau of Statistics said in a statement on its website on April 30.

Imports advanced to 102.1 billion shillings from 85.6 billion shillings as food costs more than doubled. Exports grew to 44.1 billion shillings from 38.8 billion shillings, according to the data.

“The shilling is feeling the pressure of a widening balance of payment which despite all measures to support it has not worked as the market sees a weaker shilling on account of higher imports,” Duncan Kinuthia, a dealer at Nairobi-based Commercial Bank of Africa Ltd., said in a phone interview today. “The central bank committee is expected to retain the benchmark rate at 18 percent tomorrow as it attempts to keep support for the shilling in the medium term.”

The Central Bank of Kenya accepted all 3.25 billion shillings in bids for seven-day repurchase agreements at a weighted average rate of 16.369 percent, after offering 9 billion shillings of the securities, an official with the bank, who declined to be named in line with policy, said by phone from the capital.

Uganda’s shilling climbed 0.2 percent to 2,500 per dollar, while Tanzania’s shilling gained for the first day in two, rising 0.2 percent to 1,585 per dollar.

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


Reviving Keynes
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus