Kenya’s shilling gained for the fourth day, the longest winning streak in four months, as the central bank retained its benchmark rate at a record high for the sixth month.
The currency of East Africa’s biggest economy appreciated 0.2 percent to close at 85.75 per dollar, the longest series of gains since Feb. 1, according to data compiled by Bloomberg. It had traded 0.5 percent stronger to 85.51 earlier.
Kenya’s central bank retained its benchmark rate at a record-high 18 percent in its monetary policy committee meeting today, it said in an e-mailed statement.
“The Kenya Shilling remains vulnerable to external shocks due to the current account deficit, estimated at 11.4 percent of GDP in April 2012 and the instability in the euro zone,” the central bank said in the statement.
Kenya accepted all 5.79 billion shillings ($67.5 million) of bids for seven-day repurchase agreements at a weighted average rate of 17.783 percent, a central bank official, who declined to be named in line with policy, said by phone from the capital, Nairobi. The bank had offered 8 billion shillings of the securities, the official said.
In a bid to support the currency, the central bank has reduced money supply through at least 91 billion shillings in repurchase agreements since May and selling an unspecified amount of dollars in the market. The Finance Ministry is encouraging intervention to prevent swings in the exchange rate.
“Despite the enhanced Open Market Operations undertaken in May 2012, excess liquidity conditions have persisted in the market, thereby posing a risk to demand driven inflation pressure and exchange-rate stability,” the central bank said. “The MPC will continue to monitor closely foreign exchange activities in the market and take appropriate measures to sustain exchange rate stability.”
Kenya received the first $240 million of a $600 million syndicated loan agreed upon with three international lenders last month, Joseph Kinyua, permanent secretary at the Finance Ministry, said in an e-mailed statement today. The remaining $360 million will be drawn down after one month, he said.
Kenya’s trade deficit widened in March as fuel imports rose to the highest in seven months, the Kenya National Bureau of Statistics said on May 30 on its website. The gap increased 22 percent from a year earlier to 80.3 billion shillings. The inflation rate fell to the lowest in more than a year in May, slowing for a sixth month, to 12.2 percent from 13.1 percent a month earlier, the Nairobi-based Kenya National Bureau of Statistics said in an e-mailed statement on May 30.
The Ugandan shilling gained 0.9 percent to close at 2,487.50 per dollar while Tanzania’s shilling weakened less than 0.1 percent to close at 1,588 per dollar.
To contact the reporter on this story: Johnstone Ole Turana in Nairobi at firstname.lastname@example.org
To contact the editor responsible for this story: Antony Sguazzin at email@example.com