Bloomberg News

Kenya Shilling Heads for 2nd Weekly Drop in March Amid Challenge

March 22, 2013

Kenya’s shilling depreciated for a second week this month as uncertainty about how the country’s Supreme Court will rule on a challenge to Uhuru Kenyatta’s presidential victory weighed.

The currency of East Africa’s biggest economy headed for a 0.2 percent drop in the first week of trading since the March 16 petition was filed. It traded 0.1 percent lower at 85.75 per dollar by 3:39 p.m. in Nairobi, a second day of declines.

The Kenyan court has 14 days from the filing to give its verdict on Raila Odinga’s dispute of Kenyatta’s win. It could decide to confirm the victory or overturn the results and order a new election, according to the country’s constitution.

“The week begun with the election petition and that is negative news for the currency,” Duncan Kinuthia, head of trading at Nairobi-based Commercial Bank of Africa Ltd., said by phone. “After that, there has been very little activity in the market.”

The Central Bank of Kenya offered 14 billion shillings ($140 million) in term auction deposits and received bids totaling 7.75 billion shillings at an average yield of 9.5 percent. The bank also offered 2 billion shillings in seven-day repurchase agreements and received bids amounting to 9.481 percent, an official who asked not to be identified in line with policy said by phone today.

All the bids were accepted, the official said. The bank uses the repos to reduce money supply and support the shilling.

Uganda’s currency eased 0.2 percent to 2,635 per dollar, while the Tanzanian shilling strengthened 0.2 percent to 1,621 per dollar.

To contact the reporter on this story: Eric Ombok in Nairobi at eombok@bloomberg.net

To contact the editor responsible for this story: Vernon Wessels at vwessels@bloomberg.net


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