Bloomberg News

Kenyan Shilling Gains Second Day This Week as Bank Curbs Supply

May 25, 2012

Kenya’s shilling gained for the second day this week as the central bank withdrew money from the market through repurchase agreements to support the currency.

The currency of East Africa’s biggest economy appreciated as much as 0.2 percent to 85.15 by 1:21 p.m., in the capital, Nairobi.

Kenya’s central bank accepted all 6.2 billion shillings ($73 million) of bids for seven-day repurchase agreements at 17.792 percent, after offering 8 billion shillings, an official, who declined to be identified in line with policy, said in a phone interview today.

“The shilling has halted its losing streak due to tight liquidity conditions in the market with overnight interbank rates touching 20 percent”, Nairobi-based NIC Bank Ltd. (NICB) said in a note to investors. “The shilling is expected to still be under pressure against the dollar as demand remains strong, although exporters may take advantage of the shilling weakness.”

Tanzania’s shilling gained 0.3 percent to 1,588 to the dollar, while the Ugandan shilling appreciated 0.5 percent to 2,485 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


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