Bloomberg News

Kenya Shilling Weakens Third Day as Bank Stays out of Market

May 10, 2012

Kenya’s shilling weakened for a third day, as the central bank continued to stay out of the money market.

The currency of East Africa’s biggest economy depreciated as much as 0.5 percent to 83.70 per dollar and was trading 0.2 percent weaker at 83.45 as of 2:20 p.m.

“The shilling is on a retreat due to high liquidity prevailing in the money market and the decision by the central bank not to intervene for the third day,” John Muli a dealer at Nairobi-based African Banking Corp., said in a phone interview today.

The interbank rate rose to 16.815 percent from 16.813 percent, NIC Bank Ltd. (NICB) said in a note to clients.

The central bank refrained from selling repurchase agreements for a third day, an official in the bank’s money market department, who asked not to be identified citing policy, said in a phone interview. The bank removed a total of 26 billion shillings ($312 million) from the market through one- week repo auctions from April 27 through May 7 to support the currency.

Tanzania’s shilling gained, appreciating less than 0.1 percent to 1,581.15 to the dollar. The Ugandan shilling gained for a second day, appreciating as much as 0.4 percent to 2,470 to the 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


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