Bloomberg News

Kenya Shilling Snaps 3-Day Rally as Bank Fails to Meet Demand

July 11, 2012

Kenya’s shilling snapped a three-day rally as the central bank failed to meet demand for repurchase agreements and term-auction deposits.

The currency of East Africa’s largest economy depreciated less than 0.1 percent to close at 83.75 per dollar, having traded 0.6 percent weaker at 84.20 earlier.

“The shilling has weakened on account of increase in liquidity as the central bank’s payment for matured securities is higher than the amount its sucking from the market through repurchase agreements and term-auction deposits,” Jeremiah Kendagor, head of trading at Nairobi-based Kenya Commercial Bank Ltd. (KNCB), said in a phone interview.

The bank sold today 1.5 billion shillings ($18 million) of seven-day repos at a weighted average rate of 14.85 percent, said an official, who asked not to be identified in line with policy. It also accepted 1.5 billion shillings of bids for 28- day deposits at 14.95 percent, the official said by telephone from Nairobi. The bank received total bids of 5.47 billion shillings, having offered 3 billion shillings for both securities.

The Tanzanian shilling weakened less than 0.1 percent to 1,586 per dollar, while the Ugandan shilling depreciated 0.3 percent to 2,474 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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