Bloomberg News

Kenyan Shilling Gains for Fourth Day as Government Receives Loan

June 05, 2012

Kenya’s shilling gained for the fourth day, the longest winning streak in four months, as the government received the first tranche of an international loan.

The currency of East Africa’s biggest economy appreciated as much as 0.5 percent to 85.51 per dollar and was up 0.4 percent at 85.65 at 12:18 p.m. in Nairobi, the longest series of gains since Feb. 1, according to data compiled by Bloomberg.

Kenya received the first $240 million of a $600 million syndicated loan agreed 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 central bank will probably keep its benchmark rate unchanged at a record-high 18 percent, where it’s been since December, in its monetary policy committee meeting today, according to five out of six economists in a Bloomberg survey. One analyst predicted a one percentage point cut, which would be the first reduction in a year and a half. The decision will be announced later today.

“The bank will rather err on the cautious side with the possibility that global sentiment could weigh on the shilling” and is “wary of the impact cutting rates would have on the currency,” Thalma Corbett, chief economist with NKC Independent Economists in Paarl, South Africa, said in an e-mail.

Trade Deficit

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 ($938 million). The inflation rate fell to the lowest for 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 central bank has offered 8 billion shillings for seven- day repurchase agreement, a bank official, who declined to be named in line with policy, said by phone.

The Ugandan shilling gained 0.9 percent to 2,487.50 per dollar while Tanzania’s shilling appreciated 0.1 percent to 1,585 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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