Bloomberg News

Kenyan Shilling Weakens to Four-Month Low on Month-End Demand

May 29, 2012

Kenya’s shilling retreated to a four- month low on increased demand for dollars from importers to settle month-end obligations.

The currency of East Africa’s biggest economy depreciated 0.6 percent to 85.95 per dollar, the weakest intraday price since Jan. 25, by 4:11 p.m. in the capital Nairobi, according to data compiled by Bloomberg.

“The Kenyan shilling weakness is due to end-month importer demand, falling government bond yields and a global rush to safety into dollar is expected to continue mounting pressure on the local currency,” Nairobi-based NIC Bank Ltd. (NICB), said in a note to clients.

Kenya’s three-month and six-month yields fell for the 19th straight week at an auction last week, after the government halved its borrowing target. 182-day bills borrowing costs slid to 10.915 percent from 20.914 percent realized on Jan 23, while yields on 91-day treasury bills declined to 9.865 percent from 20.799 percent tagged on similar-maturity debt sold on Jan 12

Kenya has lowered its local borrowing target to 62.1 billion shillings ($723 million) 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 today 8 billion shillings of bids of 9.225 billion shillings for seven-day repurchase agreements on offer at 17.952 percent, after offering 8 billion shillings, an official who declined to be identified in line with policy, said in a phone interview. The bank accepted 1.5 billion shillings of late six-day repurchase agreement at 16.952 percent, the official said.

Ugandan shilling appreciated 0.4 percent to 2,470.62 per dollar while Tanzania’s shilling remained unchanged at 1,590 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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