Bloomberg News

Kenyan Shilling Gains Third Day This Week on Local Debt Demand

August 03, 2012

Kenya’s shilling gained for a third day this week as higher yields and lower inflation spurred demand for government debt.

The currency of East Africa’s largest economy appreciated as much as 0.4 percent before trading less than 0.2 percent stronger at 84.13 per dollar by 4:17 p.m. in Nairobi, the capital, according to data compiled by Bloomberg.

The Central Bank of Kenya yesterday received 12.9 billion shillings ($153 million) in bids for 3-month securities, having offered 4 billion shillings. The country’s inflation rate slowed for an eighth month, falling to 7.7 percent in July from 10.1 percent in June, the Kenya National Bureau of Statistics said on July 31.

“The local currency has gained on increased offshore investments into government debt off the back of elevated yields and falling inflation,” Nairobi-based NIC Bank Ltd. (NICB) said today in a note to clients.

Food costs, with a 36 percent weight in the consumer price index, declined 1.9 percent and transportation prices including fuel retreated 1.4 percent.

The central bank received 7.6 billion shillings in bids for 6-month securities at a market-weighted average rate of 13.038 percent on Aug. 1.

The bank accepted 3.8 billion shillings of seven-day repurchase agreements at a weighted average yield of 10.127 percent, an official, who asked not to be identified in line with policy, said today. The bank also accepted 100 million shillings each in 14- and 21-day day term auction deposits at 10.45 percent, for both tenures, the official said by telephone today from Nairobi.

Tanzania’s shilling gained for a second day, strengthening 0.2 percent to 1,574 per dollar to the highest on a closing basis since June 29.

The Ugandan shilling weakened 0.2 percent to 2,490 per dollar, a second day of declines to the lowest on a closing basis since June 15.

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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