Bloomberg News

Kenya Shilling Weakens Fourth Day as Yield Fall Reduces Appetite

May 11, 2012

Kenya’s shilling weakened for the fourth day as falling yields on government securities reduced investors’ appetite.

The currency of East Africa’s biggest economy depreciated less than 0.1 percent to close at 83.55 per dollar, the weakest since Feb 9, after trading as much as 0.4 percent weaker at 83.80 earlier in the day.

“The Kenyan shilling tumbled to a three-month low against the dollar as falling yields on government securities reduced appetite to hold the currency,” NIC Bank Ltd. (NICB) said in a note to clients.

Kenya’s three-month and six-month borrowing costs fell for the 17th straight week after the government cut the size of its weekly debt offering and halved its target for domestic debt purchases this financial year.

The yield on the 91-day Treasury bills declined to 11.381 percent at yesterday’ sale from 20.799 percent at a sale on Jan 12, while the yield on 182-day bills retreated to 13.076 percent from 20.914 percent realised on Jan 23, according to the central bank website.

Kenya’s central bank accepted all 9.3 billion shillings ($111 million) of bids received for seven-day repurchase agreements, said Godfrey Putunoi, a dealer at the bank’s money- market department.

The weighted average rate for the repos was 16.073 percent, he said by phone today from Nairobi, the capital. The bank had offered 5 billion shillings, he said

The central bank has stayed out of the money market the last three days. The bank mopped a total of 26 billion shillings through repurchase agreements from April 27 through May 7, according to data compiled by Bloomberg.

Tanzania’s shilling gained for the second time this week, appreciating by 0.3 percent to close at 1,578 to the dollar, while the Ugandan shilling remained unchanged at 2,465 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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