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Kenya’s shilling retreated to its lowest level in more than four months as investors leave the market following a slump in yields on government securities.
The currency of East Africa’s biggest economy depreciated 0.4 percent to 85.26 per dollar and was trading 0.1 percent weaker at 85 by 12:03 p.m. in Nairobi. A close at this level will be the lowest since Jan 27, taking the shilling’s slump this month to 2.2 percent, according to data compiled by Bloomberg.
The currency’s weakening is a result of the “exit of investors from our money market following the decline in the yields on government securities which had attracted considerable interest from international investors earlier in the year,” Finance Minister Robinson Githae said during an event at his office today in the capital.
Kenya’s three- and six-month yields fell for the 18th straight week after the government halved borrowing. The yield on 91-day Treasury bills declined to 10.075 percent at a sale May 17 from 20.799 percent tagged on similar-maturity debt sold Jan 12. On 182-day bills, borrowing costs slid to 12.078 percent on May 16 from 20.914 percent realized on Jan 23, according to the central bank’s website. Bids for the three-month bills declined to 3 billion shillings ($35 million) on May 17 compared with 8.6 billion shillings on Jan 12.
Kenya has lowered its local borrowing target to 62.1 billion shillings from 119.5 billion shillings for the fiscal year ending June 30, replacing shilling-denominated financing with a $600 million syndicated loan arranged by Citigroup Inc., South Africa’s Standard Bank Group Ltd. and London-based Standard Chartered Plc.
The central bank accepted 2.45 billion shillings of bids for repurchase agreements at a weighted average rate of 17.959 percent after offering 7 billion shillings of the securities, a Kenyan official, who declined to be identified in line with policy, commented in a phone interview today from Nairobi.
Tanzania’s shilling weakened 0.4 percent to 1,592.75 to the dollar, while the Ugandan shilling appreciated 0.5 percent to 2,470 per dollar.
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