Kenya’s shilling weakened for a third day, heading for the biggest drop in two weeks, as businesses sought dollars to pay month-end bills.
The currency of East Africa’s largest economy depreciated as much as 0.4 percent to 84.40 per dollar, the biggest one-day drop since June 12, and was trading 0.2 percent weaker at 84.25 by 1:03 p.m., in Nairobi, the capital.
“The shilling is being dragged down by end-month demand for the greenback from the energy and telecom sectors and will continue weakening as the market continues to experience the increased dollar demand from importers covering their end-month requirements,” Nairobi-based NIC Bank Ltd. (NICB), said in an note to clients. “We expect the market to trade within the 84.00 to 84.50 levels today.”
The shilling, Africa’s best-performing currency this year, may weaken after the central bank cuts interest rates as soon as next month, JPMorgan Chase & Co. analyst Giulia Pellegrini said.
“The currency may trade at 88 to 90 a dollar by the end of this year,” Pellegrini said by phone from Johannesburg. “We expect more currency weakness to come through in the second half,” she said in a research note dated June 7 and e-mailed today.
The shilling appreciated 2.2 percent in the seven days through June 21, closing at 83.55 per dollar, the highest since May 11, according to data compiled by Bloomberg. Kenya’s central bank did not offer repurchase agreements and term-auction deposits for a fifth day today, said a bank official who asked not to be identified in line with policy.
Uganda’s shilling gained less than 0.1 percent to 2,468 per dollar, while Tanzania’s currency appreciated to the highest in more than a year, gaining 0.3 percent to 1,548 per dollar. A close at this level will be the highest since July 27.
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